Answer

1. F

   Facts

   When salary arrears for earlier years are received in one year, they can push you into a higher slab. Sec 89 relief reduces the extra tax by comparing the tax with the arrears taxed in the year of receipt against the tax if they had been taxed in the years they relate to. You claim it by filing Form 10E.

2. P

   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
3. A

   Analysis

   Say you received ₹3,00,000 of arrears in FY 2025-26 for three earlier years. Taxing all of it this year may cost 30% on much of it, while in earlier years your rate may have been 5% or 20%. The relief is the difference between the extra tax this year and the extra tax for those years. It is not a deduction from income, but a reduction of tax.

4. C

   Conclusion

   1. 1Get the year wise break up of arrears from your employer
   2. 2Get your taxable income and tax for each earlier year
   3. 3Compute relief in Form 10E Annexure I
   4. 4File Form 10E before the ITR and claim relief in the return

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.