Without Form 16, tax computation becomes cumbersome
Our motivations to take up a new job knows no bound. We want to move closer to home, ensure that the new role aligns with our career goals, and of course, a bigger pay cheque.
In all the excitement starting work at the new office and adapting to new work conditions, we tend to overlook some key issues that pose problems while preparing income tax returns at the end of the financial year.
We’ll discuss three common problems salaried individuals who’ve changed jobs encounter at the time of filing tax returns.
I forgot to collect my Form-16
Ideally, you should collect your Form-16 from your employer before you leave the company. This makes preparing income tax return easier at the end of the year.
If you have forgotten to get your Form 16, you are still okay, but the tax computation is somewhat cumbersome.
Add up all the salary credited and tax deducted from your payslips. Match the tax deducted against your Form 26AS. Form 26AS contains the summary of all the taxes paid by you during the year. This can be accessed from the Income Tax Department website.
I did not submit investment proofs at my new company
Your former employer calculates your salary and TDS based on the investments you had declared at the beginning of the year. If you didn’t disclose your salary from the old employer to the new one, your current employer only calculates taxes for the remainder of the year and deducts TDS accordingly. In most cases, this might not be enough.
There’s also the possibility that you could have invested more under Section 80C
So, to avoid discovering a huge tax bill closer to the submission deadline, calculate all the numbers all over again and pay tax dues, if any.
Start by adding up income earned from Company 1 for X months and income earned from Company 2 for Y months. Take into consideration the total amount you have invested under Section 80 during the financial year between April 2014- March 2015 and the allowances given to you. Add up the total tax deducted from both the employers.
Use an online income tax calculator to determine if there are any pending taxes. Pay the tax due before you file your income tax return.
I don’t know what to do with my Provident Fund corpus
A portion of your salary is deducted and contributed to a retirement fund every month called the Provident Fund. Your employer also makes a matching contribution to your fund.
At the time of leaving, you can choose to transfer this money to your new employer, provided they offer the EPF benefit, or withdraw it completely.
Note that withdrawals made before 5 years of continuous service is fully taxable. They are tax-free after 5 years.
Fill up the Form 10C and Form 19 to transfer the money.
If you’ve just changed jobs this year, make sure you take care of these issues to avoid running into problems while preparing your income tax return.
Mridhula Raghavan works as a content strategist at www.cleartax.in. www.cleartax.in is India’s largest Income Tax E-filing Website for Individuals and Businesses.
