ITR
Relief on salary received in advance
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Facts
Sec 89 covers salary received in advance as well as in arrears. Form 10E Annexure I has the same computation for advance salary, comparing the tax in the year of receipt with the tax in the years it relates to.
Provisions and law
- Sec 89 (now Sec 157)Relief when salary or family pension is received in arrears or in advance
- Rule 21A, Income-tax Rules 1962Manner of computing Sec 89 relief and Form 10E
Analysis
If ₹3,00,000 of advance salary for April to June 2026 was received in March 2026, it is taxed in FY 2025-26. Relief compares that with taxing it in FY 2026-27. If you will be a non-resident in FY 2026-27 with little Indian income, the comparison may favour you. Keep the employer's letter showing it is an advance.
Conclusion
- Get a letter confirming the advance and the period it covers
- Estimate income for the later year
- Compute relief in Annexure I
- File Form 10E before the ITR
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