Filing your income tax return after a mid-year job change — Walnut
A job change can happen anytime, and it is rare for anyone to “schedule” this on the basis of the financial year. If you have changed jobs during the year, and are wondering how to file your income tax return, read on.
When you join a new company, you will be given Form 12B, in which you have to mention your PAN, details of salary already paid by the previous employer as well as any tax deducted, and tax-saving investments done or planned for the year.
You can refer to your older salary slips or if you were given a salary sheet with breakup. You can also check your Form 26AS online, which lists income and tax deducted. This can be accessed by
i) logging into the TRACES portal or
ii) from the Income Tax e-filing website, or
iii) selecting the ‘View Tax Credit Statement’ option from your bank’s Netbanking interface
If you worked for a very short time at the previous company, it is likely that less tax was deducted if your taxable income was in a lower tax slab, or even exempt altogether if less than Rs. 2.5 lakh. Minimum exemption limit considered by both employers, HRA exemption, reimbursement of medical expenses, LTA and other tax deductions can often get overlooked or duplicated, leading to incorrect calculations.
Mentioning these details in Form 12B gives your current employer a better idea of your overall taxable income and investments done/planned, making it easier to calculate your tax liability accurately for the remaining part of the year, and then issue a consolidated Form 16.
Some other factors you should keep in mind:
Filling in Form 12B is not compulsory
You can choose not to declare details of taxes paid or salary received from the previous employer. However, your current employer will calculate your tax liability based only on salary they’re aware of, which can be lower than actual tax payable by you.
This can cause a problem when you’re filing your income tax return at the end of the year. Not only will you have to pay the additional tax, but there would be interest charged on the outstanding tax payable, under Section 234B and 234C if no advance tax was paid by you during the year.
Reporting of other/exempt income
If you have income from other sources, like interest on Savings Accounts or Fixed Deposits, you can either report it to your employer so tax is deducted from salary itself, or mention it separately when filing your income tax return, and pay additional tax as applicable.
If there is income received from the previous employer which is tax-exempt, like PF withdrawal or gratuity, it should be mentioned in the ITR form under exempt income.
Check Form 26AS
Form 26AS is a statement that consolidates taxes paid on your behalf — this includes tax deducted on salary from both (or more) employers and other income from consulting, commissions, fixed deposits and so on.
If you notice any discrepancy between your Form 16 and Form 26AS, or in any other amounts, you should inform the deductor so those entries can be corrected at the earliest.
Once all the documentation is in order, you can proceed to file your income tax return using this step-by-step guide.
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Originally published at www.getwalnut.com on June 28, 2017.