Being a salaried individual in the private sector, shifting jobs is common and it is a part of professional life. With the change in job, changes many things which include change of your employer and change in your salary slab.
In case you are among those who have changed jobs during FY 2018-19, you will get two Form 16s. One is from your previous employer and another one is from your current employer. If you’re worried about how to file your returns in this case.
Form 16 is issued by the employer to its employees, this includes detailing the deducted taxes from salaries. Form 16 is divided into two parts–Namely, Part A and Part B.
Part A contains the month-wise summary of the income credited to the employee’s account during the financial year, this also includes the amount of taxes deducted month wise.
This also includes the details of the employer and employee such as addresses, PAN of the employee and employer, along with the Tax Deduction and Collection Account Number of the employer.
Whereas Part B contains the break-up of salaries paid which helps the employee to file his/her taxable components in the ITR.
Here’s a Step-wise approach to Consolidate and File Your Returns
To file your Income Tax Return start following these steps in case of a job change:
- The first thing you need to do is consolidate salary earned from both the employers for the same financial year.
- Your second step should be to deduct the value of exempt allowances and perquisites such as HRA and travel allowance (it varies from employer to employer) hence you need to deduct it carefully.
- In case you have not submitted the proof of rent receipts, so your employer may not have given you HRA exemption. But this can be claimed while filing the return.
- Now comes another important task which is to claim the deduction under various sections. This may be under section 80C, 80D, 80G and so on for whichever you are eligible. There is a possibility that the same deductions are also allowed by all the employers in Form 16. Remember Tax benefit of deductions can be taken only once against your total income.
- At last, calculate tax liability and deduct deduction of TDS deducted by all the employers mentioned in Form 16 issued. You can also verify the amount of TDS deducted with Form 26AS.
You can choose not to declare taxes from previous employers or details of taxes paid. However, your current employer will only calculate your tax liability based on the pay they know, this can be lower than the actual tax you need to pay.
When you are filing your income tax return at the end of the year, this can cause problems. You can have to pay those taxes along with the interest on the outstanding amount.
To avoid such a situation, submit Form 12B to your new employer along with the detailed salary backups like Basic Salary, HRA, and other perquisite and allowances, and deductions under section 80c, 80D, etc.
Other / Revenue Income Reporting
If you have additional income from other sources, such as interest on a savings account or fixed deposit, you can report it to your employer, so that they can deduct this amount from your salary itself. You can also mention it separately while filing your income tax return, and Pay the applicable additional tax at that time.
If there is any income received from the previous employer which is tax-free, such as PF withdrawal or gratuity, then it should be mentioned in the ITR form under the rebate income.
So, file your ITR form wisely and declare the correct information and stay worry-free. Changing jobs is common but one should always take care of the taxes associated. There should be appropriate disclosures in the tax return to avoid future trouble.