New Form 39 to help you claim income tax exemption on past salary, gratuity in FY27: Key details

Ever wondered what happens to your tax liability when you receive pending salary from the past, such as salary arrears or gratuity for previous service, in a financial year where you are already required to pay tax on your current income?

In such cases, the arrears received are added to your current taxable income. While clubbing arrears with current salary or income can potentially hike your tax liability, the Income-tax rules provide a form that can be filed for tax exemption on arrears. Until FY 2025-26 (AY 2026-27), you could file Form 10E for this purpose.

From the current Financial Year 2026-27 (Tax Year 2026-27), Form 10E has been replaced by a new Form 39. This article explains key details of this newly introduced form.

What is the new Form 39?

Section 157 (1) of the Income-tax Act, 2025 provides for "neutralizing higher tax burden that may arise on inclusion of additional salary and other specified receipts in the total income of the current year," according to the Income-tax Department. The tax relief under Section 157 (1) can be availed by filing Form 39.

Therefore, taxpayers can file Form 39 in cases where salary is received in arrears or in advance. This tax relief form can also be filed in case of specified receipts such as gratuity, retrenchment compensation, and commutation of pension.

You can file Form 39 on receiving any of the following payments for claiming tax relief under Section 157 (1):

• Additional salary or additional family pension

• Gratuity for past service

• Retrenchment compensation

• Commutation of pension

The new Form 39 has the following features, enabling better user experience and compliance:

• Auto-populated/pre-filled data

• Real-time validations and check box-based smart verification

• Standardised name and address field

Apart from the above, each category of receipt in the new Form 39 contains uniform calculation tables, depicting clear formulas and reducing the number of inputs from taxpayers. This new feature will help bring more clarity and ease of filing.

What are the documents required for filing Form 39?

According to the Income-tax Department, the following documents are required for filing Form 39

• Permanent Account Number (PAN)

• Break-up of receipts

• Calculation sheets showing total income and tax for the current year and relevant earlier years

• Income-tax Returns of previous years

• Form 130/131 (previously Form 16, 16A) of previous years, or salary/pension statements

• Proof of lump sum receipts, which could be in the form of an employer's letter, pension order, retrenchment order etc.

Do you need to file Form 39 for AY 2026-27?

No. For AY 2026-27 (FY 2025-26), you need to file Form 10E as per Income-tax Rules 1962.

The new Form 39 can be filed from next year for Tax Year 2026-27 as per Income-tax Rules 2026.

When is tax relief applicable?

Tax relief under Section 157 (1) is enabled for the relevant year. This helps provide relief from excess tax liability due to the clubbing of income and ensures correct tax calculation in the ITR.

"The form has been redesigned to be simpler, with fewer data inputs and less repetitive information. Each category of receipt (additional salary, gratuity, retrenchment compensation etc.) contains uniform computation tables, simplifying taxpayer input and system validation which brings in clarity and ease of filing," The Income-tax Department says.

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