Income Tax: Can I claim relief under Section 89(1) without a break-up of salary arrears?

Q. My company has been going through some financial problems and have been paying me a salary irregularly (less than net every month) since the financial year 2022-2023. Now I have received a lump sum during the financial year 2024-2025 against my outstanding salary. My company has not indicated as to under which head the same is paid to me. Also the years against which I have been paid have not been informed. I have been asking for the same but the company will not be providing any information on it (for reasons not known to me). Can I claim benefit to us 89 and if so then how can I file form 10E without the required information. I have been regularly filling my income tax returns).

Salary becomes taxable earlier on receipt or on a due basis. So any salary received in advance becomes taxable in the year of receipt even if the same has not become due. Likewise, the salary due but not paid becomes taxable in the year in which it becomes due to the employee.

So the salary for the years 2022-2023 and onwards becomes taxable in your hands in the year to which the same is related, though not fully received during that year. Ideally you should have offered the same for tax in the respective years. 

Income from employer must be reported as salary 

Any income received from an employer becomes taxable under the head salaries so that even if the employer does not provide you the details, the same have to be offered for tax as salary. In case you have not offered the full salary in the year to which it relates, it is better that you include the same in your income for the financial year 2024-2025.

Since the employer is not willing to provide you the break-up of the year to which the lump sum salary belongs, you cannot submit form no. 10E and therefore cannot claim a rebate under Section 89(1) in respect of arrears of salary received during the financial year 2024-2025.

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Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.com and @jainbalwant on his X handle.

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