Arrears of Salary – Relief under Section 157, Rule 73 and Form No. 39 (Old 89(1))
- Section 157 (old section 89(1)) gives tax relief when arrears or advance of salary, salary for more than 12 months, profits in lieu of salary or family-pension arrears push you into a higher rate.
- You claim it by application in Form No. 39 under Rule 73.
- Relief is the extra tax caused by taxing the arrears in one year instead of in the years they relate to.
Government employees often receive DA arrears or pay-revision arrears in a lump sum. Taxing the whole amount in one year can push income into a higher slab. Section 157 of the Income-tax Act, 2025 is meant to remove that unfairness.
When relief is available
Section 157(1) applies where your total income is assessed at a higher rate because of:
- salary received in arrears or in advance;
- salary for more than twelve months received in one tax year;
- a payment in the nature of profits in lieu of salary under section 18(1); or
- arrears of family pension.
The Assessing Officer grants the relief on your application, as prescribed. No relief is allowed on income for which you have claimed the specified deduction in section 19(1) (section 157(2)).
How the relief is worked out (Rule 73)
Rule 73 sets out the computation. In plain terms: first work out the tax on your income for the year including the arrears. Then work out what the tax would have been if the arrears had been added to the income of the years they belong to. The relief is the difference, if the first figure is higher. The Rule gives step-by-step formulae for arrears relating to one or more tax years.
Form No. 39
Form No. 39 is the form for claiming relief under section 157(1) for additional salary or family pension (the old Form 10E). It is filled with details such as the year-wise salary and the arrears relating to each year. Your employer needs the form (or the information in it) when deducting TDS on salary under section 392, because section 392(4) lets you give the employer particulars of relief under section 157 for the purpose of calculating TDS.
Practical steps
- List the arrears amount and the year each part relates to (for example DA arrears per month, converted to tax years).
- Compute the tax with and without the arrears as described in Rule 73.
- Fill Form No. 39 and keep a copy to give to your employer or to file with your return as required.
- Follow the procedure in Rule 73 and the form instructions for submitting it, and keep the working with your return papers.
Keep in mind that the new regime has a different slab structure and standard deduction, so the relief amount can differ between regimes.
Still have a question? Ask TAXBADI – get an answer from the Act, Rules and forms, with the exact sections cited.
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This guide is for general information and is not tax advice. Tax figures are before health and education cess unless stated. The law and the official notifications are the final authority – see our Disclaimer. Found a mistake? Tell us.