PF arrears · Form 39
Salary Arrears Calculator: Increment and Revision Arrears with PF and Tax Relief: This free salary arrears calculator works out the arrears due when a salary increase or revision is paid late, with effect from an earlier month. Enter the effective month, the month arrears are paid, and old and revised salary. It shows:
- gross arrears;
- PF on arrears, month by month with the correct wage ceiling, including the ₹25,000 ceiling from 17 September 2026;
- arrears split by financial year, which you need to claim tax relief in Form 39.
Salary Arrears Formula
Example (calculator default): an increment from ₹30,000 to ₹34,500 gross (Basic + DA from ₹12,000 to ₹13,800), effective January 2026 and paid with November 2026 salary.
| Item | Working | Amount |
|---|---|---|
| Arrears months | January to October 2026 | 10 |
| Gross arrears | 4,500 × 10 | ₹45,000 |
| PF wages (50% rule) | Old ₹15,000 (half of ₹30,000); revised ₹17,250 (half of ₹34,500) | |
| PF, January to August | Both above the ₹15,000 ceiling | ₹0 |
| PF, September | Ceiling ₹15,000 for 16 days, ₹25,000 for 14 days: 12% × (17,250 − 15,000) | ₹270 |
| PF, October | 12% × (17,250 − 15,000), within ₹25,000 | ₹270 |
| Arrears after PF | 45,000 − 540 | ₹44,460 |
| By financial year | FY 2025-26: 3 months; FY 2026-27: 7 months | ₹13,500 / ₹31,500 |
The employer also pays ₹540 of PF on the arrears. ₹13,500 relates to FY 2025-26, so this employee can check for relief in Form 39.
What Are Salary Arrears?
Salary arrears are pay that was due for past months but is paid later. The common cases are:
- an annual increment or salary revision announced after the date it takes effect;
- a promotion effective from an earlier date;
- a wage-settlement or minimum-wage revision with retrospective effect;
- a DA hike paid later.
Arrears are not a bonus. They are the difference between the salary you should have been paid and what you were actually paid, for each month of the arrears period. For government DA hikes, use the DA arrears calculator.
PF on Salary Arrears
Arrears of wages attract PF like regular wages. Employee and employer each contribute 12% of the extra PF wages for each arrears month. Two points make arrears PF different from a flat 12%:
- Ceiling month by month: if PF is paid on capped wages, each arrears month uses the ceiling of that month: ₹15,000 up to 16 September 2026 and ₹25,000 from 17 September 2026. An employee already at the ceiling gets no PF on arrears for that month.
- Labour-code wages: PF wages are Basic + DA, but not less than 50% of gross. If the revision raises gross but not Basic, PF wages can still rise through the 50% rule.
Choose "Actual wages" if your employer pays PF on full wages. See the PF calculator for monthly PF.
Tax on Arrears and Relief Under Section 157 (Form 39)
Arrears are taxed in the year you receive them. If arrears of earlier years push you into a higher slab, you can claim relief:
- Work out tax for the current year with and without the arrears; the difference is A.
- For each earlier year, work out tax with that year's arrears added and compare it with the tax on the original income; the difference is B.
- Relief = A − B, if A is more than B.
From tax year 2026-27 the relief is under Section 157(1) of the Income-tax Act, 2025 (earlier Section 89(1)), and is claimed in Form 39 (earlier Form 10E). File Form 39 online before you file your return. The year-wise arrears table in the calculator gives the amounts for each year. For TDS this year, use the TDS on salary calculator.
How Employers Calculate and Pay Arrears
- Work out each component's difference (Basic, DA, HRA, allowances) for every month from the effective date, after loss-of-pay days.
- Recompute PF (and ESI, if covered) on the revised wages for those months.
- Pay the arrears with the next salary and show them as a separate line on the salary slip; see the salary slip generator.
- Add the arrears to taxable salary for TDS in the month paid, and show them in Form 16 (Form 130).
- Check that gratuity, leave encashment and other benefits for people leaving use the revised wages.
The calculator assumes full months worked at the old salary. If there were loss-of-pay days, reduce the arrears for those months.
How to Use This Salary Arrears Calculator
- Open Dates: choose the month the revision is effective from and the month arrears are paid (the first month paid at the new salary).
- Open Old salary: enter gross and Basic + DA before the revision.
- Open Revised salary: enter gross and Basic + DA after the revision, and how PF is paid.
- Read the gross arrears, PF on arrears, arrears after PF and the year-wise split. Use Copy to share it.
Frequently Asked Questions
How do you calculate salary arrears?
(Revised monthly gross − old monthly gross) × the number of months from the effective date to the month the new salary is first paid. ₹4,500 a month for January to October is ₹45,000.
Is PF deducted on salary arrears?
Yes. PF is due on arrears of wages at 12% from the employee and 12% from the employer, worked out month by month on the extra PF wages, within the ceiling of each month if PF is capped.
Which PF ceiling applies to arrears?
The ceiling of the month the arrears relate to: ₹15,000 up to 16 September 2026 and ₹25,000 from 17 September 2026, not the ceiling of the month they are paid.
Are salary arrears taxable?
Yes. They are taxed as salary in the year you receive them. If arrears of earlier years raise your tax, you can claim relief under Section 157(1) of the Income-tax Act, 2025 by filing Form 39.
What is Form 39?
The form for claiming tax relief on salary arrears from tax year 2026-27, replacing Form 10E. It is filed online on the income tax portal before you file your return.
How is relief on arrears calculated?
Extra tax this year because of the arrears, minus the extra tax you would have paid if the arrears had been taxed in the years they relate to. The difference, if positive, is your relief.
Are arrears paid on HRA and other allowances?
Yes, if the revision increases them. Arrears cover the full difference in gross salary, so every component that changed is included.
When are increment arrears paid?
Usually with the first salary at the revised rate, as a separate line on the salary slip. Some employers pay them in the following month after payroll approval.
Do arrears affect gratuity and leave encashment?
Yes. Once the revision is effective, gratuity and leave encashment for anyone leaving after that date should use the revised wages, even if arrears are paid later.
What is the difference between salary arrears and DA arrears?
Salary arrears cover any retrospective pay increase. DA arrears are the part caused by a dearness allowance hike, common for government employees; use the DA arrears calculator for those.