I heard Section 89 relief is only for residents. Can I claim it as an NRI?

Yes. That is a common but wrong claim. The law gives the relief to any assessee, with no residence condition, so an NRI can claim Section 89 relief on bunched salary or pension arrears just as a resident can.

What happens if I forget to file Form 10E?

The relief is denied. Form 10E must be e-filed on the portal before you file your return, or the processing centre disallows the Section 89 claim in the intimation. It is a procedural step, but skipping it costs you the relief. File it first.

Does Section 89 relief work under the new tax regime?

Yes. Section 89 is a relief against your tax, not one of the deductions or exemptions the new regime removes, so you get it under both the old and the new regime. File Form 10E either way.

Can I claim it on my VRS payout too?

Not on the part you already exempted. If you claimed the voluntary-retirement exemption under Section 10(10C) on some of the payout, you cannot also claim Section 89 relief on that same part. The law bars the double benefit.

ITR Filing

Section 89 relief on salary or pension arrears as an NRI

Getting years of arrears in one lump can push you into a higher slab. Section 89 undoes that, and yes, an NRI can claim it.

You are an NRI who received salary or pension arrears in a lump, several years of it landing in one year, and the bunching has pushed you into a higher tax slab. You may also have read that the relief for this is only for residents. That is wrong. Section 89 relief exists precisely for this, and it is open to you as an NRI. There is one procedural step you must not skip, or the relief is denied. Here is how it works.

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Last reviewed: 26 July 20265 min readReviewed by Preetesh Maloo, CA

The short answer

When you receive salary or pension in arrears or in advance, and the bunching into one year pushes you into a higher slab, Section 89 gives you relief by re-spreading the tax as if the income had been taxed in the years it actually related to, and you get the difference back. Despite what many websites say, this is not limited to residents, the law gives it to any assessee, so an NRI can claim it, and it works under both the old and the new tax regime because it is a relief against tax, not a deduction the new regime removes. The one step you cannot skip is Form 10E: it must be filed on the portal before you file your return, or the system will simply deny the relief. One limit: you cannot claim Section 89 on the part of a VRS payout for which you already claimed the separate voluntary-retirement exemption under Section 10(10C).

References on this page

Section 89 relief re-spreads the tax on bunched salary or pension arrears as if taxed in the years they related to, softening the higher slab
It is available to any assessee, not just residents, so an NRI can claim it; and it works under both the old and new tax regime
Form 10E must be e-filed before the return, or the portal denies the relief (a procedural rule, not a Section 89 penalty)
No Section 89 relief on the part of a VRS payout already exempted under the voluntary-retirement exemption, Section 10(10C)

What Section 89 does, and that an NRI can claim it

Getting years of arrears in a single year is a rough deal, because Indian tax is charged at slab rates, so a lump that would have sat in lower slabs across several years instead gets taxed at your top rate all at once. Section 89 exists to undo exactly that. It re-computes your tax as if each slice of the arrears had been taxed in the year it actually related to, works out the difference against taxing it all in the year of receipt, and gives you that difference back as relief. It applies to salary and pension arrears or advance, arrears of family pension, and certain lump sums.

The correction worth making loudly: many websites say this relief is only for residents. It is not. The section gives the relief to any assessee, with no residence condition, so as an NRI you can claim it just as a resident can. It also survives the new tax regime, because Section 89 is a relief against your tax, not one of the deductions or exemptions the new regime strips away, so you get it whichever regime you are on. Under the Income-tax Act, 2025 the relief is renumbered to Section 157 from FY 2026-27, but for the year you are filing under the old law it is still Section 89.

The Form 10E step you cannot skip

There is one procedural trap that catches people, and it is unforgiving. To claim Section 89 relief you must file Form 10E on the tax portal, and it has to be filed before you file your return. This is not written into Section 89 itself as a penalty, it comes from the rules and a standing instruction that made online Form 10E compulsory, but the effect is very real: if you claim the relief without filing Form 10E first, the processing centre disallows it outright in the intimation and you lose it. So the order matters, Form 10E first, then the return claiming the relief.

One limit to keep in mind. If part of your lump sum was a voluntary-retirement payout on which you already claimed the separate voluntary-retirement exemption under Section 10(10C), you cannot also claim Section 89 relief on that same part, the law bars the double benefit. Beyond that, the arrears are taxed in the year you receive them, and Section 89 simply softens the rate. A practising CA computes the relief correctly across the relatable years, files Form 10E before the return, and makes sure the relief is not lost to a sequencing mistake.

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What's involved

What the CA actually does

1
We compute the relief
We work out your Section 89 relief across the years the arrears related to, so you pay the right, lower tax.
2
We file Form 10E first
We file Form 10E on the portal before your return, so the relief is not denied on a technicality.
3
We confirm you qualify
We confirm the relief applies to you as an NRI, under whichever tax regime suits you best.
4
We avoid the double benefit
We keep Section 89 off any VRS amount you already exempted, so the claim holds.

What to have ready

Documents you'll typically need

The arrears or lump sum received and the years it relates to
Your salary or pension breakup for those years
Any VRS or retirement exemption already claimed
Your PAN and residency details

Your destination country can change the details

Requirements differ from one consulate, university and visa route to the next — how recent the figures must be, how long funds must have been held, and which certificates are mandatory. We assemble the documents around the exact checklist you're applying under. To see how India's tax treaty with your country of residence affects related filings, set your country below or compare all 31 countries.

Frequently asked questions

Common questions

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Got years of salary or pension arrears in one go?

Tell us the arrears and the years. A practising CA will compute your Section 89 relief and file Form 10E on a free call, no obligation.

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