📄 India Tax Tool · FY 2026-27

Arrears Relief Calculator

Updated · GetHirePlus team

Got salary, pension or DA arrears in one lump sum? Work out your arrears relief the way Form 10E Annexure I does, using the slab rates that actually applied in each earlier year. From tax year 2026-27 the relief is in Section 157 of the Income-tax Act, 2025 (earlier Section 89(1) of the 1961 Act).

This calculator works out tax relief on arrears. Formula: A is the extra tax the arrears cause in the year you receive them (tax with arrears minus tax without). B is the extra tax they would have caused if each slice had been taxed in its own earlier year, at that year's rates. Relief = A minus B, and never below zero.

Year Of Receipt

The new regime is the default from FY 2023-24 onwards. Pick the one you are actually taxed under.

Changes the basic exemption limit under the old regime only. The new regime has one set of slabs for every age.

Rs.

Taxable total income after all exemptions and deductions, but without the arrears.

Rs.

The full arrears amount that got added to your income this year.

Year Wise Break Up Of Arrears

Sample values shown (the worked example below). Change them to get your own number.

Relief Under Section 89(1)
Relief You Can Claim
Rs. 0
Enter your figures to calculate
Year Of Receipt
Tax on income including arrearsRs. 0
Tax on income excluding arrearsRs. 0
Extra tax because of bunching (A)Rs. 0
If The Arrears Had Been Taxed Year By Year
YearIncomeArrearsExtra tax
Total extra tax in earlier years (B)Rs. 0
Net Position
Relief under Section 89(1), A minus BRs. 0
Tax payable this year before reliefRs. 0
Tax payable this year after reliefRs. 0
These figures are tax on total income only. They do not include interest under Sections 234B or 234C (now Sections 424 and 425 of the Income-tax Act, 2025), and they assume you are a resident individual. File Form 10E online before you file your return, otherwise the relief is usually disallowed at processing.

How arrears relief under Section 89(1) works

Indian income tax works on a receipt basis for salary. If your employer clears three years of pay revision arrears in March 2027, all of it is taxed in FY 2026-27, even though two thirds of it was earned long before. The money is the same, but the tax is not: a lump sum can shove you from the 10 percent band into the 20 or 30 percent band, strip away your Section 87A rebate, or even trigger surcharge. You end up paying more tax purely because the payment was late.

Section 89(1), read with Rule 21A(2) of the Income-tax Rules, 1962, fixes that. For arrears received from 1 April 2026 the same relief sits in Section 157 of the Income-tax Act, 2025. It does not exempt the arrears and it does not let you shift income out of the year of receipt. What it does is measure two numbers and hand you the gap.

A = Tax for the receipt year on income WITH arrears, minus tax on income WITHOUT arrears
B = For each earlier year: tax on that year's income WITH its share of arrears, minus tax without it

Relief under Section 89(1) = A minus B, and never less than zero

If the arrears would have been taxed more lightly in the old years (the usual case, because you earned less then), B is smaller than A and the difference comes back to you as relief. If your old years were at the same or a higher rate, B matches or exceeds A, the relief is nil, and there is nothing to claim.

Step by step, the way Form 10E wants it

  1. Get the year wise break up of the arrears from your employer or pension disbursing authority. Most DA and pay commission arrears letters already carry this table.
  2. Pull the total income figure from each of those old returns, or from the intimation under Section 143(1). Use the figure after deductions, which is what Annexure I calls total income.
  3. Work out the receipt year tax twice, once with the arrears in your income and once without, and take the difference. That is A.
  4. For every earlier year, work out the tax twice as well, with and without that year's slice of the arrears, using that year's own slabs, rebate limit, surcharge and cess. Add up those differences to get B.
  5. Relief is A minus B. File the relief form online on the e-filing portal under e-File, then Income Tax Forms, and do it before you submit the return. That is Form 10E for years up to FY 2025-26; for tax year 2026-27 it is reported as Form 39 under the Income-tax Rules, 2026, so confirm the number in the official form mapping guide.
  6. Report the relief in the Section 89 field of your ITR. The acknowledgement number of Form 10E is worth keeping, because this is the single most common reason relief gets reversed.
A worked example Say your taxable income for FY 2026-27 is Rs. 20 lakh and you receive Rs. 6 lakh of arrears, Rs. 3 lakh relating to FY 2024-25 when your taxable income was Rs. 12 lakh, and Rs. 3 lakh relating to FY 2025-26 when it was Rs. 13 lakh. Landing in FY 2026-27, the arrears sit on top of Rs. 20 lakh and are taxed at 25 and 30 percent, which costs Rs. 1,66,400. Spread back, they would have been taxed mostly at 15 and 20 percent, costing Rs. 1,09,200 across the two years. The gap of Rs. 57,200 is your relief under Section 89(1). Those are the numbers loaded in the tool above, so change any of them and the table on the right rebuilds itself.

Which rates the calculator uses for each year

This is where most hand made Form 10E workings go wrong: people apply today's slabs to a 2019 year. The tool keeps a separate rate card per financial year.

Financial yearNew regime slabsRebate under 87ACess
FY 2017-18Not availableRs. 2,500 up to Rs. 3.5 lakh (old regime)3 percent
FY 2018-19Not availableRs. 2,500 up to Rs. 3.5 lakh (old regime)4 percent
FY 2019-20Not availableRs. 12,500 up to Rs. 5 lakh (old regime)4 percent
FY 2020-21 to FY 2022-232.5 / 5 / 7.5 / 10 / 12.5 / 15 lakh bands at 5 to 30 percentRs. 12,500 up to Rs. 5 lakh4 percent
FY 2023-243 / 6 / 9 / 12 / 15 lakh bands at 5 to 30 percentRs. 25,000 up to Rs. 7 lakh, with marginal relief4 percent
FY 2024-253 / 7 / 10 / 12 / 15 lakh bands at 5 to 30 percentRs. 25,000 up to Rs. 7 lakh, with marginal relief4 percent
FY 2025-26 and FY 2026-274 / 8 / 12 / 16 / 20 / 24 lakh bands at 5 to 30 percentRs. 60,000 up to Rs. 12 lakh, with marginal relief4 percent

The old regime slabs have not moved since FY 2017-18, when the rate on the Rs. 2.5 lakh to Rs. 5 lakh band fell from 10 percent to 5 percent: nil up to Rs. 2.5 lakh, 5 percent from Rs. 2.5 lakh to Rs. 5 lakh, 20 percent from Rs. 5 lakh to Rs. 10 lakh and 30 percent above that, with the basic exemption rising to Rs. 3 lakh for senior citizens and Rs. 5 lakh for super senior citizens. Surcharge runs at 10 percent above Rs. 50 lakh, 15 percent above Rs. 1 crore, 25 percent above Rs. 2 crore and 37 percent above Rs. 5 crore, except that the 37 percent rate does not apply under the new regime from FY 2023-24, where 25 percent is the ceiling. Marginal relief on surcharge is applied wherever a threshold is crossed.

Things to check before you rely on the number The calculation is only as good as the income figures you feed it, so take them from your filed returns rather than from memory. The tool assumes a resident individual with no relief already claimed, and it ignores interest under Sections 234B and 234C (now Sections 424 and 425). The FY 2026-27 rates used here are the ones Budget 2026 left unchanged from FY 2025-26. If your arrears include gratuity, termination compensation or commuted pension, those fall under Rule 21A(3), (4) and (5) and need a different method, not this one.

When relief is worth the most

Relief tends to be large when the arrears are big relative to your normal income and the old years were in low bands: government DA arrears after a pay commission, a promotion granted with several years of retrospective effect, pension revision arrears, or a long pending court or tribunal award of back wages. It tends to be nil when you were already in the 30 percent band in the earlier years, or when the arrears relate to a single recent year at the same rate.

One more practical point on cash flow: under Section 192(2A) of the 1961 Act (carried into Section 392 of the 2025 Act) a government employer, company, cooperative society, local authority, university, institution, association or body may take Section 89 relief into account while deducting TDS on the arrears, provided you give them the Form 10E particulars. Many private employers decline and deduct on the gross arrears, which means you carry the extra deduction until your refund arrives. Asking early is usually worth it.

Both, depending on when the arrears reached you. Arrears received up to 31 March 2026 are covered by Section 89(1) of the Income-tax Act, 1961 and Form 10E. Arrears received from 1 April 2026, in tax year 2026-27, are covered by Section 157 of the Income-tax Act, 2025. The A minus B method is the same, so the calculation on this page does not change.

Frequently asked questions

When you receive salary, pension or family pension in arrears or in advance, the entire amount is taxed in the year you actually receive it. That can push you into a higher slab and leave you paying more tax than you would have paid had each instalment reached you on time. Section 89(1), read with Rule 21A(2), corrects that distortion. It compares the extra tax caused by the arrears in the year of receipt with the extra tax you would have paid had the arrears been taxed in the years they relate to, and allows the difference as relief.
Yes. Form 10E must be filed online on the income tax e-filing portal before you file the return for the year in which the arrears were received. If you claim Section 89 relief in the return without filing Form 10E, the relief is commonly disallowed at the processing stage and you receive a notice along with a demand. Form 10E is a standalone online form, not an attachment to the return, and it does not require any supporting documents to be uploaded.
Yes. The new regime (Section 115BAC, now Section 202) restricts a specific list of exemptions and deductions, and arrears relief is not on that list. So relief on arrears is available whether you are taxed under the new regime or the old regime. What changes is the arithmetic: the tax for each year has to be worked out under the regime that actually applied to you in that year, which is why this calculator lets you set the regime year by year.
The slabs, rebate limit, surcharge rates and cess rate of the earlier year itself, not the current year's. For example the old regime rebate under Section 87A was Rs. 2,500 on income up to Rs. 3.5 lakh for FY 2017-18 and FY 2018-19, then Rs. 12,500 on income up to Rs. 5 lakh from FY 2019-20 onwards. Health and education cess was 3 percent for FY 2017-18 and 4 percent from FY 2018-19. Using current-year rates for an old year is the single most common mistake in Form 10E working.
Enter the total income of that year as assessed or as reported in the return you filed, meaning the figure after all exemptions and deductions were applied. That is exactly what Annexure I of Form 10E asks for in its total income column, so taking the number straight from your old ITR or intimation under Section 143(1) keeps your working consistent with the form.
Then there is no relief to claim. This happens when your income in the earlier years was at the same or a higher slab rate than your income in the year of receipt, so spreading the arrears back would not have reduced the tax. Section 89 only neutralises a bunching disadvantage, it does not create a benefit where none exists. In that case you still pay tax on the arrears in full in the year of receipt and you do not need to file Form 10E.
Yes. Dearness allowance arrears, pay commission and pay revision arrears, promotion arrears paid with retrospective effect, family pension arrears and arrears of pension on revision all fall within Section 89 read with Rule 21A, because they are salary or pension relating to an earlier year received late. The employer or pension disbursing authority usually issues a year wise break up of the arrears, which is the figure you enter against each year here.
Rule 21A deals with those separately. Sub-rule (2) covers salary received in arrears or in advance, sub-rule (3) covers gratuity for past services, sub-rule (4) covers compensation on termination of employment and sub-rule (5) covers commuted pension. Each has its own method and its own eligibility conditions, for instance gratuity relief under sub-rule (3) needs past service of at least five years. This calculator implements only the sub-rule (2) method for salary and pension arrears.
File it before filing the return for the year in which the arrears were received. For arrears received up to March 2026 that is Form 10E. For arrears received in tax year 2026-27 the relief falls under Section 157 of the 2025 Act and the form is reported as Form 39 (earlier Form 10E); check the official form mapping guide before filing. On the portal it sits under e-File, then Income Tax Forms, then File Income Tax Forms. You fill Annexure I with the year wise arrears break up and the total income of each of those years, and the portal computes the relief, which then flows into the relief field of your return.
Sometimes. Section 192(2A) allows a government employer, or an employer that is a company, cooperative society, local authority, university, institution, association or body, to give effect to Section 89 relief while computing TDS on salary, provided the employee furnishes the particulars in Form 10E. Many private employers do not take the risk and deduct TDS on the full arrears instead, leaving you to claim the relief in your return and collect a refund.

Related tools

HR teams processing pay revisions can also use GetHirePlus for the hiring side: AI screening and interviews, with per-minute pricing.

Sources

Official sources used for the rates and rules on this page:

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