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How to file income tax return with multiple Form 16s
We at TaxMantra do understand that within the same financial year an individual might be associated with multiple employers. Taxpayers often get confused regarding how to file their income tax return with multiple Form 16s.
At the end of the year, a salaried employee needs to collect Form 16 from both the employers -- current and previous -- as that is the basis on which the employee would file her/his returns. When you join a new organisation, you should furnish your TDS details from the previous employer to your current employer. This will help your current employer in deducting tax accordingly.
Form 16 is the mandatory requirement in respect of return filing for salaried individuals. Form 16 is a certificate issued by an employer to an employee who provides details in respect of salary earned by the employee and tax deducted at source by the employer. It's a TDS certificate issued by the employer to the employee.
The employer takes into account the exemptions and deductions available to employee after considering the slab benefits and deduct taxes at the time of payment of salary.
How to file income tax return with multiple Form 16s
Multiple Form 16
It is a very common situation wherein employee switches employment during a given financial year and fails to provide the details of previous employment to the current employer due to which deduction and exemptions is availed more than once. As a result of this, less tax is deducted by the present employer and there is a huge outstanding tax liability and interest u/s 234(B) and 234(C) for less tax payment for the financial year. This could be easily avoided by just providing Form 16 of the previous employment to the current employer.
Why a person holds more than one Form 16?
There may be cases when a person holds multiple Form 16s. Such conditions may arise in two situations, when:
1. A person switches a job in the same financial year.
2. A person is working with multiple employers simultaneously.
How to file income tax return with multiple Form 16s
Multiple Form-16 and IT return
It's quite simple to file the IT return when someone holds multiple Form-16s. One should keep following points in mind as per the situation:
Multiple Form-16s due to job switch
The employee should either declare the details of past Forms-16s to the new employer to calculate the tax liability considering the previous job details or if the employee wants secrecy, then s/he can mention the consolidated income of all the Form-16 at the time of filing IT return. In any case Form 16s from all the employers would be required.
How to file income tax return with multiple Form 16s
Multiple Form-16 due to multiple jobs at a time
In this case, an employee can simply file the consolidated income at the time of filing IT return to take into account all the jobs s/he is involved in.
Finally, it is necessary to note here that a consolidated Form 16 is irrelevant because of different TAN numbers of the employers. So employee must hold Form-16s separately from all the employers.
While filling the return employee has to aggregate total salary (i.e. of both the companies and the result will be your tax paid or refundable as per the condition while setting off the TDS).
If the employee has forgotten to mention the significant detail to its employer under Form-16 details, then s/he can include it at the time of filing return and provide the relevant documents of proof to the current employer for records. One must check the Form 16 carefully to eliminate the chances of mistakes in PAN no, Tan No and address details, and such.
How to file income tax return with multiple Form 16s
Steps to avoid high taxes
In order to avoid the additional interest outflow, the employee should furnish the details of salary income received from the previous employer to the new employer.
These particulars can be furnished in Form 12B (Form for furnishing details of income under section 192(2)).
Tax will be deducted by the new employer after taking into account the income furnished by the employee in Form 12B which contains the details like TAN of the employer, PAN of the employee, tenure of employment with the previous employer, total amount of salary, allowances and perquisites received from the previous employer and details of investment(if any) made or expenses incurred that were eligible for deductions and were declared to the previous employer.
Moreover, if an employee is working with multiple employers in the financial year s/he needs to file her/his return including all the Form 16s s/he has at the time of filing the return. In this context, a consolidated Form 16 is inappropriate since every employer has different TAN numbers.
Every employee is thus required to file all the separate Form 16s s/he holds.
Thus at the time of filing return the total aggregate salary of all the company shall be considered and tax will be paid simultaneously and refund will be provided as required.
Thus the employer can calculate and deposit the correct taxes only if the employee is providing him the correct details of her/his employment. Even in a situation where somebody doesn't want to disclose the salary numbers of the previous employer to the new employer, the employee can request the employer to deduct taxes at a higher rate or can deposit the amount as advance tax by herself/himself.
This will help in avoiding any interest liability for the individual. The higher taxes deducted or advance taxes paid can later be adjusted with the tax liability during the year.