7th Pay Commission Rules: Government Employees Can Claim Tax Relief on Salary Arrears Under Section 89

Date : 09/07/2023
Read: 3 mins

Government employees receiving salary arrears can now claim tax benefits under Section 89 per the 7th Pay Commission rules. However, they need to file Form 10E for the same.

It is good news for government employees if they receive salary arrears. If their salary is eligible under the provisions of the 7^th Pay Commission, such employees can claim tax benefits on the salary arrears received. This would help in bringing down their tax liability thereby increasing their disposable income.7^th Pay Commission rules allow government employees tax relief on salary arrears

Employees can claim tax relief under the provisions of Section 89
Form 10E must be filed with the income tax department for claiming the relief or refund of excess tax paid
Know the steps of filing Form 10E and claiming the tax benefits

Here’s a look at the rules.

Tax-Saving Rules for Government Employees

The tax benefit is allowed only on salary arrears
The benefit is allowed under the provisions of Section 89 of the Income Tax Act, 1961
To claim the tax relief, eligible employees should file Form 10E online on the income tax portal
Even if excess tax has been deducted from the salary arrears, a refund can be claimed but Form 10E would be needed for the same
The form should be filed before filing the income tax return to qualify for the tax relief

So, if you are eligible for the tax benefit under the 7^th Pay Commission, download and fill up Form 10E to minimise your tax liability.

Also Read – Know how to make a salary hike work for you

Online Process for Filing Form 10E

Here are the steps to get Form 10E and file it online on the income tax website –

Visit the online portal of the income tax department at https://www.incometax.gov.in/iec/foportal/ and log into your account. If you are a new user, register yourself and create your account. Then log into the account to proceed.
On the home page, go to e-filing of tax and choose ‘Income Tax Forms’ and then ‘File Income Tax Forms.
A new page opens wherein you have to choose ‘Tax Exemptions and Reliefs Form 10E’
On the next page, choose the Assessment Year and then ‘Continue’
The instruction page for filling up Form 10E would open. Read the instructions and click on ‘Let’s Get Started’
The form would open. Choose the relevant sections and fill out the details required in the fields.
You will find the income details and five options – Arrears Salary / Family Pension, Advance Salary, Gratuity, Compensation and Pension Commutation. Choose the first option.
Provide the relevant details in the form and choose ‘Preview’
Confirm the details and click on ‘e-verify’
You will be directed to the online verification page. Complete the verification and the message ‘Submitted Successfully’ would be displayed showing that you have successfully filed and verified Form 10E online.

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The Bottom Line

The tax relief under Section 89 helps you avoid large tax outgoes on salary arrears. Claim the relief with Form 10E and enjoy an increased disposable income.

Also Read – Did you know the 7^th Pay Commission hiked Dearness Allowance?

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.