Changed jobs? How to deal with multiple Form 16s

Changing jobs is very common among individuals. People tend to change jobs for a better pay scale or to acquire new skills, and when you do this within a financial year (FY), you will have more than one Form 16. This may lead to confusion that whether your income taxes are in order or not.

Here’s is the solution to the queries arising, if you changed jobs during the year:

Inform your current employer about the previous employment

There are several individuals who do not inform their new employer about their previous salary structure. As a result, the new employer calculates income tax based on the income earned from him in the FY. This will lead to a miscalculation of taxes for the financial year.

For instance, Mr Raj has left ABC company in December 2019 and joined a new company, XYZ in January 2020. He has not informed his previous salary to XYZ. He earned Rs 6.5 lakh from the previous employment and Rs 2.4 lakh from XYZ. Now that he has not informed XYZ about Rs 6.5 lakh, they will calculate his tax based on Rs 2.4 lakh only. Now, according to XYZ, Mr Raj will not pay tax during the same year as his income is below the basic exemption limit of Rs 2.5 lakh. But, he will have to pay taxes on Rs 9 lakh (Rs 6.5 + Rs 2.4 lakh) along with a penalty while filing his income tax returns. To avoid this miscalculation of taxes, you should declare your previous salary to your new employer as soon as you join the company.

Include information of every employer in your tax return

Make sure you receive your Form 16 from all the employers you have worked in a particular FY. Form 16 is the most vital document you will need to file your income tax returns. Details such as PAN of the employer, TAN of the employer, name and address must be reported for each employer in your tax return. Cleartax allows you to upload multiple Form 16s and file your tax returns accurately.

Consolidate salary from all employers

You will have to consolidate the salary earned from all the employers while filing your tax returns. In case you miss reporting any such salary, the department might send you a notice about the non-reporting of income. Remember your salary is always taxable irrespective of whether TDS is deducted or not, so include this amount in your return.

Adjusting exempt allowances

Usually, with every job change, the salary structure changes. This also leads to changes in your allowances such as house rent allowance (HRA). Do remember to claim HRA exemption from all your employers. You just have to submit the rent receipts, in case you live in a rented apartment. If you have missed submitting rent receipts to your employers on time, you can claim HRA while filing your income tax returns also. In such a case, you will have to recalculate your HRA exemption for the entire year, adjust your salary accordingly and get a refund if excess tax was deducted.

Claim all the tax deductions

The employers usually begin the exercise of collecting proof of tax-saving deductions around February or March every year. Many individuals quit their job before this period and the employers fail to provide them with the benefit of various deductions. Don’t worry. Once you have consolidated your income earned during the financial year from various employers, you will have to sum up your deductions, in case you have invested in tax-saving avenues. 

You can claim the deductions under Section 80C to 80U while filing your income tax returns. Just remember to safely keep the proofs for future reference. Keep in mind that deductions are allowed against your total income earned in an FY, so the benefit of the deduction for tax calculation must be taken only once for a year.

Check your Form 26AS

Form 26AS is the tax credit statement which consists of details of TDS by various deductors. A salaried individual can get the details of his salary credited every month and tax deducted thereon from each employer in the Form 26AS. This form is very important for filing your income tax returns as you can take the credit of all the tax deducted against your total tax dues in a financial year. One must always cross-check the TDS entries appearing in the Form 26AS with his payslips or bank statements. In case of any mismatch in the entries, he must report the same to his employer and resolve it before filing the tax returns.

Check your tax due

When your salary income from different employers is aggregated, there are chances that you might see a tax due. Why does this happen? If your new employer does not know how much you earned from your previous job, his tax computation may be inaccurate. Generally, the basic exemption limit and standard deduction may be allowed by all your employers. The benefit of tax-saving deductions might be allowed by more than one employer while calculating tax. Also, it may happen that after summing up all your salary income, your income tax slab may have gone up.

For instance, Mr Kumar has left ABC company in December 2019 and joined a new company, XYZ in January 2020. He has not informed his previous salary to XYZ. He earned Rs 9.5 lakh from the previous employment and Rs 2.4 lakh from XYZ. According to his previous salary, his salary was under the tax slab of 20%. After summing up the salaries from both the employers, the tax slab has been moved to 30%. This situation will lead to a tax due for Mr Kumar while filing his return.

So, it’s prudent to recheck all the salary details from different employers and pay the tax due before submitting income tax returns.

Frequently Asked Questions

What to do if the previous employer does not give Form 16?

You can contact your previous employer and ask them to provide your Form 16 if you have not received Form 16 of your previous job. However, you can file your Income Tax Return (ITR) without Form 16 of your previous job by following the below steps:

• Do the salary breakup and tax deductions from your previous employment using the payslips of the previous employer.
• Next, consolidate the total income and deduct the exemptions like rent, special allowances, etc.
• Deduct deductions under sections 80C to 80U.
• Calculate the tax liability and deduct the TDS mentioned by both employers in Form 16. When you don’t have Form 16, you can find the TDS amount from 26AS.
• Pay the tax due. 

A simple way to calculate your taxes when you have changed jobs is through Cleartax Income Tax calculator. Enter your consolidated salary amount from all your jobs, exempt allowances provided by two or more employers, other income details and deductions and click on calculate to know your tax dues in minutes.

I changed 2 employers during the previous year, so I have to consider both Form 16 to file the return?

Yes, you have to consider all the Form 16 while filing your return.

There is a mismatch in the TDS as per Form 16 and as per 26AS, what should I do?

You must report the TDS mismatch to your employer and resolve it before filing the tax return. The employer must correct the TDS amount by filing a revised return of TDS to credit the TDS proceeds to the correct PAN number.

What if there are errors or discrepancies in Form 16?

When there are any errors or discrepancies in Form 16 issued by your employer, you must contact your employer to rectify the issue and get the corrected forms. Ensure the details mentioned in multiple Form 16s are accurate before filing your ITR.

Should I consider any other income apart from salary while calculating income tax?

Yes, you need to add all income sources to calculate your tax. Apart from salary income, you may have other incomes, such as income from a rented house, interest from bank accounts, income from digital assets, capital gains, freelancing income or any other taxable income. You must consider them and calculate your total income accordingly. You must report all your incomes in your ITR. 

What particulars should be checked in Form 16?

You must check your personal details, PAN number, the amount of income, exemptions and TDS deducted in all your Form 16s. If the details are wrong, you must ask your employer to rectify them and give you a new Form 16. 

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