Hi,
What is the process for income tax relief for individual who is in receipt of arrears of salary or advances salary?
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Arrears of salary received by an employee are taxed in the year of receipt if the same were not taxed earlier on due basis. However, an employee can claim relief under section 89 in respect of arrears of salary.
The income tax department provides Relief U/s 89(1). If you receive any pension or payments for the previous year, you will not be taxed on the total amount for the current year. Essentially keeping you away from paying extra taxes, because there was a delay in payment.
For claiming relief under section 89(1) for arrears of salary received, it is mandatory to file Form 10E with the Income Tax department. If Form 10E is not filed and relief is claimed, then the taxpayer is most likely to receive notice from Income Tax department for not filing Form 10E. Form 10E is to be submitted before filing the Income Tax returns.
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