Salary Arrears Relief Calculator — Section 89 and Form 10E
Reviewed by Finin2min Editorial Desk · Last reviewed 11 August 2026
Compare the additional tax caused by arrears in the receipt year with the tax that would have arisen in the years to which the arrears relate.
Enter receipt-year tax
Relief computation
Enter tax figures after applying the law applicable to each respective year.
Extra tax in receipt year
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Section 89 relief
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Measure
Amount
Aggregate additional tax in earlier years
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Net extra tax after relief
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How This Is Calculated
Section 89 relief prevents salary arrears (like a retroactive pay revision) from pushing you into a higher tax bracket just because they're received in a lump sum. It works by comparing the extra tax the arrears cause in the receipt year against the extra tax that would have applied had the arrears been received in the years they actually relate to — the relief is the difference, if the receipt-year impact is higher.
Frequently Asked Questions
What problem does Section 89 relief solve?
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Receiving several years of arrears in one lump sum can push you into a higher tax slab for that year, even though the income actually related to earlier, lower-income years. Section 89 relief neutralizes this bunching effect by comparing tax impact year-by-year instead.
Do I need to file anything extra to claim Section 89 relief?
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Yes — claiming Section 89 relief requires filing Form 10E before claiming the relief in your ITR. Skipping Form 10E can result in the relief being denied even if you're otherwise eligible.
Scope: Computes tax relief available under Section 89(1) of the Income-tax Act when salary arrears (or advance salary) received in one year relate to earlier years, using the Form 10E methodology.
Calculation logic
Compute tax on total income including arrears in the year of receipt.
Compute tax on total income excluding arrears in the year of receipt.
Recompute tax for each earlier year to which the arrears relate, both including and excluding the apportioned arrear amount for that year, using that year's applicable slab rates.
Relief under Section 89(1) = (Tax on current year income including arrears − Tax on current year income excluding arrears) − (Sum of tax including apportioned arrears for earlier years − Sum of tax excluding apportioned arrears for earlier years).
Inputs and assumptions
Requires the correct year-wise apportionment of the arrear amount as shown in the employer's arrears statement.
Uses the slab rates applicable to each of the relevant earlier assessment years, not the current year's rates, for the earlier-year recomputation.
Exclusions and edge cases
Relief under Section 89(1) is available only if Form 10E is filed before the income tax return — the calculator computes the relief amount but does not file Form 10E.
Gratuity, leave encashment and VRS compensation each have their own relief computation methods under Rules 21A(3)/(4) and are not covered by this arrears-specific tool.