Form 10E vs Form 39

What this relief actually does

If you receive a lump sum in one year — salary arrears, salary paid in advance, salary for more than 12 months at once, gratuity, retrenchment compensation, or commuted pension — it can push that year's income into a much higher tax bracket than if it had been spread out normally. This relief recalculates your tax as if the payment had been received in the year(s) it actually relates to, and caps your tax at the lower of the two figures. It doesn't reduce your income; it prevents you from being taxed at a rate you'd only hit because of the timing of the payment.

Which form applies — the transition trap

This is the exact pattern covered on what changed under the Income-tax Act, 2025, applied to one specific, commonly-needed form:

	Filing for AY 2026-27 (now)	Tax Year 2026-27 onward
Governing Act	Income-tax Act, 1961	Income-tax Act, 2025
Section	Section 89(1)	Section 157(1)
Form	Form 10E	Form No. 39 (Rule 73, Income-tax Rules, 2026)

The trap: if you receive an arrears payment in, say, June 2026 (Tax Year 2026-27, under the new Act) but reflexively reach for "Form 10E" because that's the form you've always used, you're filing under the wrong Act's paperwork for that period. Conversely, if you're completing your AY 2026-27 return right now and someone tells you to use "Form 39" because "that's the new one," that's premature — Form 39 doesn't apply to this year's filing at all.

Worked example

An employee receives ₹3,00,000 in salary arrears in two different scenarios:

• Arrears received March 2026 (still FY 2025-26): this falls inside AY 2026-27's filing. Relief is claimed via Form 10E, citing Section 89(1) of the 1961 Act, filed alongside the AY 2026-27 return (due 31 July or 31 August 2026, depending on ITR form).
• Arrears received July 2026 (Tax Year 2026-27): this falls under the new Act. Relief is claimed via Form No. 39, citing Section 157(1) of the 2025 Act, filed alongside the Tax Year 2026-27 return the following year.

Same employee, same kind of payment, different form and section — purely because of which side of 1 April 2026 the payment date falls on.

What hasn't changed

• The underlying relief mechanism — recalculating tax as if the lump sum had been spread across the years it relates to — is unaffected. This is a renumbering, not a policy change, per CBDT's own framing.
• What qualifies for relief (arrears, advance salary, salary for 12+ months, gratuity, retrenchment compensation, commuted pension) is unchanged.
• You still need the relief calculation done and the form filed before/alongside your return — this isn't optional paperwork if you want the lower tax figure to apply.