You’ve changed your job and already settled in that new work culture. But have you settled your income tax returns too?
When you change your job then it is not just about adjusting to an entirely new work environment, a rather intricate problem occurs while filing your income tax return too. Two or multiple ‘Form 16’ can lead to confusion to ensure that your taxes are in order.
Usually, employees skip informing their new employer about their previous salary. The employer has no idea about what you earned and taxes deducted can be out of place.
So, is there any solution to this problem?
Yes, there is! Let’s understand the best way to deal with this problem.
Include Information of All Employers
As a very first step, it is best to include information of every employer. For this, you must collect Form-16 from each employer. There must be clear mention of important details like TAN, PAN, name, and address of each employer in your tax return. E-file your tax returns with numerous ‘Form 16.’ You can consult expert chartered accountants in order to use their service and populate important details in your return automatically. Using their service will make the process easier for you.
Consolidate Your Salary from All the Employers
If you have changed jobs within a short duration, the employer might not have the chance to make necessary deductions or deduct TDS from your salary. An important aspect you must remember is that salary is always taxable, whether TDS is deducted or not. Hence, include this amount in your tax return. You must include the salary earned from each employer during the financial year.
Adjust Exempt Allowances
If your job change has offered you a hike in your salary, it may have also led to changes in your allowances like HRA. If you have not claimed your HRA exemption from your employers, then you are definitely making a mistake. If you are unable to submit rent receipts to the employers on time, you can claim HRA exemption while filing the return. In this case, you must recalculate your HRA exemption for the entire financial year and adjust your eventual salary accordingly.
Paying Back the Joining Bonus
Employment terms can sometimes include reimbursing your employer of any sort of joining bonus that you have received before a stipulated time period. Joining bonus is paid deducting the tax and is paid back usually by an employee inclusive of tax. The tax payment can be a loss for you till your employer makes necessary adjustments in Form 16. Hence, it is vital to review the Form 16 carefully.
Furthermore, claiming deductions is the next important thing to consider. In most of the cases, employers begin to collect proof of deductions around March or February. Most of the individuals quit their job before this time period. This implies that your employer would not have allowed you to avail the benefits of deductions.
But you don’t have to worry about it once you have consolidated your income as well as your total deductions. Deductions permitted under section 80 like 80C, 80D, 80G, and others can be claimed directly in your tax return. You just have to maintain a safe record of the proofs. The deductions are permitted against your total income. Hence, the benefit of deduction for tax calculation can be taken only once.
Do Check Form 26AS
The Form 26AS includes all details of TDS deducted by each employer. You must check the Form 26AS to see all TDS entries. Just make sure you take credit of TDS deducted by all of them against the total tax dues.
Considering Tax Dues
When you aggregate income from different employers, there is a possibility that you will see a tax due. Why does this happen?
If your new employer is unaware of income earned from your past job, his tax computation can be inaccurate. The minimum income exemption must have been allowed by your employers. Benefits of tax deduction must have been allowed by more than one employer while estimating tax or you might have pushed up the tax slab when incomes are totaled. In all such cases, you are likely to witness tax due while filing your return. In this case, you must recheck all the details and pay the tax due before submitting the return.
If still, you have any doubts regarding Form 16, then you can contact the experts CA Ashish Kumar and Associates at https://akassociatesca.com/.