Arrears Relief 89(1) Calculator
undefined
Runs entirely in your browser — your numbers never leave this page.
How it works
Arrears bunch several years of raises into one payslip — and one tax slab. Without relief, ₹3 lakh of arrears on a ₹12 lakh salary gets taxed at your marginal 15–30%; spread across the years it was actually earned, much of it would have fallen in lower slabs.
Section 89(1) fixes this: it computes tax both ways and refunds the difference. The catch is procedural — you must file Form 10E online before filing your ITR. No 10E, no relief, no exceptions.
This also covers advance salary, gratuity beyond exemption, commuted pension and VRS payouts. If a lump sum ever spikes your income, check 89(1) before paying.
Frequently asked questions
What is Section 89(1) relief?
Tax relief when salary (or pension/gratuity) for earlier years is received as a lump sum now. It recomputes tax as if the amount arrived in the right years and refunds the excess.
What is Form 10E?
The mandatory online form claiming 89(1) relief, filed on the income-tax portal before your ITR. Claims without 10E are routinely denied — this is the step most people miss.
Does it apply to pension arrears?
Yes — family pension arrears, pay commission arrears, DA arrears all qualify. So do gratuity, commuted pension and compensation on voluntary retirement.
Which regime should I use for the computation?
The regime you actually filed under in each relevant year. This calculator uses one regime for illustration; the statutory 10E computation uses each year's actual slabs and regime.
Can I claim it for advance salary?
Yes — salary received in advance is also eligible. The relief spreads it to the years it relates to, same as arrears.
What if the arrears span multiple years?
Form 10E handles year-by-year allocation (Annexure I). This calculator simplifies to a single past year — directionally right, not filing-accurate for multi-year cases.
Is there a deadline?
File 10E before furnishing the return for the year you received the arrears. Belated claims are generally rejected.
Does my employer handle this?
No — TDS is deducted on the gross arrears. Claiming 89(1) and getting the refund is your job at filing time.
Gratuity above exemption — eligible?
Yes, the taxable portion of gratuity qualifies for 89(1) relief, computed over the relevant years of service.
How big can the saving be?
Commonly 20–40% of the extra tax on the arrears. On ₹3L arrears at the 30% slab vs 20% in the due year, relief is roughly ₹30,000+.