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For individualsRates reviewed September 2026

Section 89 Relief Calculator for Salary Arrears (Form 39, formerly Form 10E)

Arrears of salary land in one year but belong to several, and because the slabs are progressive the lump sum can push you into a higher bracket than you would ever have reached had the money come on time. Section 157(1) of the Income-tax Act, 2025, which carries forward section 89(1) of the 1961 Act, lets you undo that bunching. This calculator works the relief for FY 2026-27 (tax year 2026-27) using the exact method in Rule 73 of the Income-tax Rules, 2026, the successor to Rule 21A.

The method is a comparison. First, the extra tax the arrears cause in the year you receive them: tax on total income including the arrears less tax on total income without them, which the rule calls A. Second, the extra tax they would have caused in the years they relate to: for each such year, tax on that year's income plus its share of the arrears, less the tax originally payable, added up as B. If A exceeds B the difference is your relief. If it does not, there is no relief, because the arrears are costing you no more now than they would have then.

Each year is taxed at its own slabs. FY 2025-26 and FY 2026-27 share the same new regime bands and the ₹12,00,000 rebate, while FY 2024-25 used the earlier bands starting at ₹3,00,000 with a rebate up to ₹7,00,000. The old regime slabs were the same in all three years. The claim goes on Form 39, which replaced Form 10E from FY 2026-27, and it has to be filed on or before the return due date. A return that claims the relief without the form is processed, but the relief is disallowed in the intimation.

Section 89 Relief Calculator

Applied to every year in the working. The old regime slabs did not change across these years.

Total income after the standard deduction and any other deductions, before adding the arrears.

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Relief under section 157(1) (section 89)

₹36,400

₹78,000 extra now less ₹41,600 extra then, new regime

Arrears received in FY 2026-27₹1,80,000 for FY 2025-26, ₹1,20,000 for FY 2024-25
₹3,00,000
Tax on FY 2026-27 income including the arrearson ₹23,00,000, including surcharge and cess
₹2,86,000
Tax on FY 2026-27 income excluding the arrearson ₹20,00,000
₹2,08,000
Additional tax in the year of receipt (A)what the arrears cost in tax this year
₹78,000
Additional tax for FY 2025-26 had the arrears been taxed then₹13,00,000 plus ₹1,80,000 at that year's slabs
₹28,080
Additional tax for FY 2024-25 had the arrears been taxed then₹9,00,000 plus ₹1,20,000 at that year's slabs
₹13,520
Aggregate additional tax in the earlier years (B)
₹41,600
Relief admissible (A minus B)claimed through Form 39
₹36,400
Tax payable for FY 2026-27 after the relief₹2,86,000 less ₹36,400
₹2,49,600
  • Relief is worked out for FY 2026-27 under section 157(1) of the Income-tax Act, 2025 (section 89(1) of the 1961 Act) by the A minus B method in Rule 73 of the Income-tax Rules, 2026, which carries forward Rule 21A of the 1962 Rules.
  • Each year is taxed at its own slabs: FY 2025-26 and FY 2026-27 share the same bands and the ₹12,00,000 rebate, while FY 2024-25 uses the earlier new regime bands with the rebate up to ₹7,00,000. Old regime slabs are the same in all three years. Every tax figure includes surcharge and 4% cess.
  • Form 39 (formerly Form 10E) has to be filed on or before the return due date under section 263(1)(c), or the relief is disallowed in the intimation even though the return is processed.

The formula

Relief = A − B, if A exceeds B, where A = tax on total income including the arrears − tax on total income excluding them, and B = sum over the earlier years of (tax on that year's income plus its share of the arrears − tax on that year's income)

A
The additional tax the arrears cause in the year of receipt, taking the total income with and without them at the current year's slabs.
B
The aggregate of the additional tax the arrears would have caused in each year they relate to, recomputed at that year's slabs, rebate and surcharge.
Total income
Income after the standard deduction and every other deduction, which is the figure the tax is actually charged on in each year.
Form 39
The statement of particulars under Rule 73(3), formerly Form 10E, which must be filed on or before the return due date for the relief to be allowed.

The tax figures include surcharge and 4 percent cess, and the same regime is assumed for every year in the working. Where a prior year's total income was within the rebate threshold, its original tax is nil, so the whole recomputed tax counts towards B.

How to calculate it

  1. 1

    Split the arrears by the year they relate to

    Ask the employer for the breakup, which is normally on the arrears certificate or the pay revision order. The rule requires you to first ascertain the years the additional salary relates to and the amount for each year. Anything you cannot assign to a year stays in the current year with no relief.

  2. 2

    Compute the tax for the current year twice

    Take total income for FY 2026-27 after the standard deduction and other deductions. Work out the tax including the arrears and again excluding them, at this year's slabs with rebate, surcharge and cess. The difference is A, the extra tax the arrears cost you now.

  3. 3

    Recompute each earlier year with its share of the arrears

    For every year identified in step one, add that year's share of the arrears to the total income originally assessed and compute the tax at that year's slabs. Subtract the tax originally payable on the assessed income. That difference is the extra tax the arrears would have cost in that year.

  4. 4

    Add up the earlier years and compare

    The sum of the differences from step three is B. If A exceeds B, the relief is A minus B and reduces the tax payable for the current year. If A is equal to or less than B, no relief is admissible, which usually happens when the earlier years' incomes were already in the top bracket.

  5. 5

    File Form 39 before the return

    Enter the particulars in Form 39 on the e-filing portal, or give it to the employer so the relief is reflected in the tax withheld under section 392 (section 192). The form must be furnished on or before the due date under section 263(1)(c). Claiming the relief in the return without it leads to disallowance in the intimation.

Slabs used for each year in the working, resident individual below 60

Slabs used for each year in the working, resident individual below 60
YearNew regime bandsNew regime rebateOld regime
FY 2026-27Nil to ₹4 lakh, then 5%, 10%, 15%, 20%, 25% at each ₹4 lakh step, 30% above ₹24 lakhUp to ₹60,000 where total income is within ₹12,00,000Nil to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh, 30% above
FY 2025-26Same as FY 2026-27Same as FY 2026-27Same as FY 2026-27
FY 2024-25Nil to ₹3 lakh, 5% to ₹7 lakh, 10% to ₹10 lakh, 15% to ₹12 lakh, 20% to ₹15 lakh, 30% aboveUp to ₹20,000 where total income is within ₹7,00,000Same as FY 2026-27

Worked example: ₹3,00,000 of arrears received in FY 2026-27, new regime

Total income of FY 2026-27 excluding the arrears
₹20,00,000
Arrears received
₹3,00,000
Relating to FY 2025-26, when total income was ₹13,00,000
₹1,80,000
Relating to FY 2024-25, when total income was ₹9,00,000
₹1,20,000
Regime
New regime
  • Tax on ₹23,00,000 for FY 2026-27 = ₹2,75,000 plus 4% cess = ₹2,86,000
  • Tax on ₹20,00,000 for FY 2026-27 = ₹2,00,000 plus cess = ₹2,08,000, so A = ₹78,000
  • FY 2025-26: tax on ₹14,80,000 = ₹1,06,080, less tax on ₹13,00,000 of ₹78,000 = ₹28,080
  • FY 2024-25: tax on ₹10,20,000 at that year's slabs = ₹55,120, less tax on ₹9,00,000 of ₹41,600 = ₹13,520
  • B = ₹28,080 + ₹13,520 = ₹41,600
  • Relief = A − B = ₹78,000 − ₹41,600 = ₹36,400

Relief under section 157(1) (section 89) = ₹36,400, so the tax for FY 2026-27 falls from ₹2,86,000 to ₹2,49,600

Frequently asked questions

It is a relief for anyone whose total income is assessed at a higher rate because salary, family pension, gratuity, retrenchment compensation or commuted pension arrived in arrears or in advance. Under the Income-tax Act, 2025 it sits in section 157(1), which carries forward section 89(1) of the 1961 Act, and the method is prescribed in Rule 73 of the Income-tax Rules, 2026. For arrears of salary the relief is the extra tax the arrears cost you this year less the extra tax they would have cost in the years they relate to.
For FY 2026-27 onwards the particulars go on Form 39 under Rule 73(3) of the Income-tax Rules, 2026, which replaced Form 10E. The return for FY 2025-26 still used Form 10E under the 1961 Act. Either way the form is mandatory: the e-filing portal states that if you claim the relief in the return without filing the form, the return is processed but the relief is disallowed, and the disallowance is communicated through the intimation under section 143(1) of the old Act.
On or before the due date for filing the return under section 263(1)(c) of the Income-tax Act, 2025, and in practice before you submit the return so the relief figure matches. A government servant or an employee of a company, co-operative society, local authority, university or similar body may also give the particulars in Form 39 to the employer under Rule 73(4), so that the tax withheld on salary under section 392 (section 192) already reflects the relief.
Rule 73 sets it out as Relief = A minus B, if A exceeds B. A is the tax on the current year's total income including the arrears less the tax on that income without them. B is the aggregate, for each year the arrears relate to, of the tax on that year's total income plus its share of the arrears less the tax on the income originally assessed. Every figure is computed at the slabs, rebate, surcharge and cess of the year concerned.
Yes. The rule grants relief only if A exceeds B. If the earlier years' incomes were already in the 30 percent bracket, the arrears would have been taxed at the same rate then, so B equals or exceeds A and nothing is admissible. The same happens when an earlier year's income was within the rebate threshold, because that year's original tax is nil and the whole recomputed tax counts towards B. In neither case are you worse off; the arrears simply cost no more now than they would have then.
The slabs of the year the arrears relate to, not the current ones. FY 2025-26 and FY 2026-27 share the new regime bands starting at ₹4,00,000 and the ₹60,000 rebate up to ₹12,00,000. FY 2024-25 used bands starting at ₹3,00,000, with 5 percent to ₹7,00,000, 10 percent to ₹10,00,000, 15 percent to ₹12,00,000, 20 percent to ₹15,00,000 and 30 percent above, and a rebate that removed the tax up to ₹7,00,000. The old regime bands were the same in all three years.
Yes. Section 157(1) is not among the provisions that section 202 (section 115BAC) switches off, so the relief is available in both regimes. This calculator applies the regime you select to every year in the working. If you were actually in a different regime in an earlier year, the recomputed tax for that year should follow the regime you had chosen then, and section 157(2) denies relief on any amount for which the voluntary retirement exemption in section 19(1) (Table: Sl. No. 12) has been claimed.

Sources

Rates and rules on this page come from the following. This is a working aid, not professional advice: confirm anything material with your Chartered Accountant before you act on it.

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