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Common Reasons for Getting Tax Due While E-Filing
In this article, we will discuss multiple employers and how to calculate taxes correctly in detail.
Multiple Employers
You are more likely to see a tax due at the time of filing when you’ve changed jobs even if TDS has been getting deducted each month. Here’s why:
- Let’s say you worked at Infosys for 6 months and then moved to Wipro.
- You also earned interest income of Rs.10,000 from a fixed deposit.
- You have paid an insurance premium of Rs.80,000 which qualifies for 80C deduction.
| Income | Amount in Rs. |
Income from INFOSYS(6 months) | 3,50,000 |
Income from WIPRO(6 months) | 5,00,000 |
Interest Income | 10,000 |
Total income | 8,60,000 |
- Infosys made no TDS on your income of Rs.3,50,000 as the total income is less than Rs.500,000.
- Wipro calculated tax on your income of Rs.5,00,000 and also made no TDS as the income equal to Rs.500,000. This is because they did not have information about Infosys. Tax due is arrived at as the basic exemption being provided twice for the same PAN(not allowed) and due to the combined income from Infosys and Wipro falling under a higher tax bracket.
How to Calculate Tax Correctly?
- Income tax is calculated on income after deductions.
- The total of ‘Income chargeable under Salaries’ is your gross total income.
- If you have interest income from fixed deposits etc, add it to your gross total income.
- Subtract all the deductions you’ve made under Section 80C, such as investments towards ELSS, PPF, medical insurance or life insurance.
Taxable Income as per Old Tax Regime
Particulars | Amount in Rs. | Amount in Rs. |
Income from Salary | ||
Gross Salary | 8,50,000 | |
Less - Standard Deduction | 50,000 | 8,00,000 |
Income from Other Sources | ||
Interest Income | 10,000 | |
Total Income | 8,10,000 | |
less - Chapter VI A Deductions | ||
80C - Insurance Premium | 80,000 | |
80TTA - Interest income | 10,000 | 90,000 |
Taxable Income | 7,20,000 |
Tax slabs are per the Old Tax Regime
Slabs | Percentage applicable | Tax applicable |
0- Rs.2,50,000 | No tax |
|
Rs.2,50,000- Rs.5,00,000 | 5% | Rs.12,500 |
Rs.5,00,000 – Rs.7,20,000 | 20% | Rs.44,000 |
Health and Education Cess | 4% on tax (4% of Rs.56,500) | Rs.2,260 |
Total Tax Payable | Rs.58,760 | |
TDS made by Infosys and Wipro | Rs.0 | |
Tax amount to be taxpayer at the time filing (excluding interest) | Rs.58,760 | |
Taxable Income are per the New Tax Regime
Particulars | Amount in Rs. | Amount in Rs. |
Income from Salary | ||
Gross Salary | 8,50,000 | |
Less - Standard Deduction | 50,000 | 8,00,000 |
Income from Other Sources | ||
Interest Income | 10,000 | |
Total Taxable Income | 8,10,000 |
Tax slabs are per the New Tax Regime
Slabs | Percentage applicable | Tax applicable |
0- Rs.3,00,000 | No tax |
|
Rs.3,00,000- Rs.6,00,000 | 5% | Rs.15,000 |
Rs.6,00,000 – Rs.8,10,000 | 10% | Rs.21,000 |
Health and Education Cess | 4% on tax (4% of Rs.36,000) | Rs.1,440 |
Total Tax Payable | Rs.37,440 | |
TDS made by Infosys and Wipro | Rs.0 | |
Tax amount to be taxpayer at the time filing (excluding interest) | Rs.37,440 | |
As seen, under both the regimes there is a tax liability. Hence, it is very important for the taxpayer to calculate the total income in advance and either report it to the latter employer or pay advance taxes to avoid one-time payment and interest thereon.
Tip: You can check the detailed breakdown of your tax computation under both the regimes by using the ClearTax calculator . For instructions on how to pay the tax due, follow the steps listed in this article.
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