The formula for relief is (Tax on total income inlcuding arrears - tax on total income excluding arrears (Step 1 ) (For the year in which arrears recieved ) (X1-X2) Minus Tax on total income inlcuding arrears - tax on total income excluding arrears (Step 1 ) (For the year in which arrears due ) (Y1-Y2) Simple way of calculating tax relief under section 89 Step - 1 Let this be X Tax on total income inlcuding arrears - tax on total income excluding arrears (Step 1 ) (For the year in which arrears recieved ) (X1-X2) Let this be X Step - 2 - Calculating difference in tax with /without arrears for years for which arrears received Let this be Y Tax on total income inlcuding arrears - tax on total income excluding arrears (Step 2 ) (Of the year to which arrears belong ) A1-A2 Repeat step 2 , in case there are multiple years for which arrears is recieved i.e B1-B2,C1-C2 Y = A1-A2 + B1-B2 + C1-C2 +D1-D2 Step 3 - Relief under section 89 - (Step 1 - step 2 ) = X - Y (Note that x will always be greater because arrears on account of A,B,C,D get added to X i.e year in which tax computed Note that in the return we simply claim this figure as relief from tax under section 89


 


(This is not only for salary arrears but also other eligible arrears as mentioned in section 89 )Most important is to therefore remember that assessee after claiming tax relief benefit under section 89 for arrears must not forget to upload form 10 E online in the income tax website else his request for relief under section 89 is not allowed during intimation assessment