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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 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.
Income from INFOSYS(6 months) Rs.3,50,000
Income from WIPRO(6 months) Rs.5,00,000
Interest Income Rs.10,000
Total income Rs.8,60,000

 

  • Infosys deducted 10% TDS on your income of Rs.3,50,000 after providing basic exemption of Rs 2,50,000.
  • Wipro calculated tax on your income of Rs.5,00,000 and deducted 10% TDS after providing for the basic exemption of Rs 2,50,000. This is because they did not have information about Infosys. Tax due is arrived at as the basic exemption being provided twice for 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 80 such as investments towards ELSS, PPF or medical insurance or life insurance.
Gross total  income Rs.8,60,000
Total deductions under Section 80C Rs.80,000
Total taxable income Rs. 7,80,000

 

Tip: Check both your Form 16s that you are getting all the deductions under Section 80C. If you’ve forgotten to submit investment proofs to either of the companies, you can claim them in your tax return directly.

This is the income on which your tax must be paid.  Going by the tax slab, the total tax incidence works out to Rs.83,430.

0- Rs.2,50,000 No tax
Rs.2,50,000- Rs.5,00,000 10% Rs.25,000
Rs.5,00,000 – Rs.7,80,000 20% Rs.56,000
Education cess + Higher education cess 3% on tax

(3% of Rs.81,000)

Rs.2,430
Rs.83,430

 

Tip: You can check the detailed breakdown of your tax computation in the Word document on ClearTax or use a calculator to do the math for you.

For instructions on how to pay the tax due, follow the steps listed in this article.

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