With the introduction of the Income-tax Act, 2025, the tax compliance framework in India is undergoing a significant transformation. One such important change is the replacement of Form 10E with the newly introduced Form 39, effective from 1st April 2026.
This change is part of the government’s broader objective to simplify tax procedures, enhance transparency, and improve user experience on the income tax portal.
🔄 What is the Change?
Under the erstwhile Income-tax Act, 1961:
Taxpayers were required to file Form 10E to claim relief under Section 89(1) for:
• Salary arrears
• Advance salary
• Gratuity
• Pension commutation
Under the Income-tax Act, 2025:
Form 10E has been replaced by Form 39
Relief is now governed by Section 157(1)
Taxpayers must file Form 39 to claim relief on such income.
📌Purpose Remains the Same
Even though the form number has changed, the core objective remains unchanged:
To provide tax relief where income is received in a lump sum (arrears or advance), thereby preventing higher tax liability due to slab rate impact.
⚙️Key Features of Form 39
The newly introduced Form 39 is designed to be more efficient and user-friendly:
✅ Auto-populated taxpayer details
✅ Standardized computation format
✅ Improved validation checks
✅ Reduced manual errors
✅ Seamless integration with ITR filing system.
These improvements aim to make compliance easier and reduce the chances of incorrect claims.
⚠️Transition Phase – What Should You Know?
• For Financial Year 2025–26:
A. Existing provisions may still apply in certain cases.
B. Form 10E may continue depending on applicability.
• From Financial Year 2026–27 onwards:
A. Form 39 becomes mandatory
B. Form 10E will no longer be applicable
📊 Quick Comparison
Particular Old Regime New Regime
Applicable Law Income-tax Act, 1961 Income-tax Act, 2025
Form Form 10E Form 39
Section Section 89(1) Section 157(1)
Purpose Relief on arrears/advance income Same. (modernized system)
🧾 Practical Impact for Taxpayers
• Salaried individuals receiving arrears or advance salary must ensure timely filing of Form 39
Non-filing may lead to denial of relief and higher tax liability.
• Employers and professionals should update their compliance processes and advisory frameworks.