TaxTMI 
TaxTMI 
Is Form 10E applicable for Notice Pay received in Full & Final Settlement?
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....s Form 10E applicable for Notice Pay received in Full & Final Settlement?<br> Query (Issue) Started By: - Amit Dated:- 10-7-2026 Last Reply Date:- 11-7-2026 Income Tax<br>Got 1 Reply<br>Income Tax<br>Hi Everyone, I need some guidance regarding Section 89 and Form 10E. I resigned from my job and my last working day was 27-Feb-2026. My notice period was 3 months, but the company relieved me ea....
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....rly and paid me for the remaining 3 notice period as part of my Full & Final settlement. The breakup included: • 1 month as Resign Salary Release (Feb) • 2 months as Notice Pay(Mar and April) The entire amount was taxed, TDS was deducted, and it is included in my Form 16 for FY 2025-26. Because of this, an amount equivalent to the April (FY 2026-27) notice period....
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.... was also taxed in FY 2025-26, even though my employment had already ended in February. Can I claim relief under Section 89 by filing Form 10E for this payment? Reply By Sanjeev Agarwal: The Reply: Based on the facts you've shared, you may be eligible to claim relief under Section 89 by filing Form 10E, but only if the payment qualifies as salary received in advance and the calculation....
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.... under Rule 21A results in a tax benefit. Your Situation • Last working day: 27-Feb-2026 • Notice period: 3 months, but your employer relieved you early. • F&F settlement included: • February salary (1 month) • Notice pay for March (1 month) • Notice pay for April (1 month) • The entire amount was paid an....
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....d taxed in FY 2025-26, with TDS deducted and reflected in Form 16. Since the April notice pay relates to FY 2026-27 but was received and taxed in FY 2025-26, it may be treated as salary received in advance, which is one of the situations covered under Section 89. Can Section 89 Relief Be Claimed? Possibly, yes. Section 89 is intended to provide relief where salary received in advance or a....
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....rrears causes a higher tax burden because it is taxed in a different financial year than the period to which it relates. However, relief is not automatic simply because future salary was paid early. How Relief Is Calculated Rule 21A requires a comparison of: • Tax payable in FY 2025-26 including the advance salary. • Tax payable in FY 2025-26 excluding the advanc....
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....e salary. • Tax that would have been payable if the advance salary had been taxed in FY 2026-27. Relief is available only if this comparison shows that you paid additional tax because the income was taxed earlier. Form 10E If the payment is treated as salary received in advance, you should file Form 10E (Annexure I - Salary Received in Advance) before filing your Income Tax R....
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....eturn. When Relief May Be Nil Even if you're eligible to file Form 10E, the actual relief may be zero if: • Your tax slab remains the same in both years. • The advance salary does not increase your effective tax rate. • The Rule 21A calculation does not show any excess tax. Documents to Keep Maintain: • Full & Final settlement sta....
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....tement • Form 16 • Salary slips • Resignation acceptance and relieving letter • Notice pay breakup (February salary, March notice pay, April notice pay) Conclusion: Based on the facts provided, there is a reasonable basis to examine and claim relief under Section 89, as part of your notice pay relates to the next financial year but was taxed i....
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....n the current year. Whether you actually receive relief depends entirely on the Rule 21A computation, not merely on the fact that the payment was received in advance.<br> Discussion Forum - Knowledge Sharing ....