Changed jobs? Reconcile Form 16 before ITR filing

The income tax return filing for the financial year 2023-24, i.e., for the assessment year 2024-25, is underway. Many individuals may have switched jobs during the financial year 2023-24. While some may have shifted one job, others may have changed two. In such cases, multiple Form-16s are received. What is Form 16? In cases of multiple Form-16s, how to file income tax returns? Let’s find out.

Form-16 plays an important role in filing ITR correctly. Form 16 is issued to employees by the employer, i.e., the company. It contains information about salary income, exemptions, deductions, and TDS deducted from salary during the financial year. Employers should issue Form 16 for FY2023-24 by June 15, 2024. Upon receiving Form 16, you should verify basic details such as your PAN number, employer’s PAN, and TAN.

When an employee changes jobs during the financial year, they receive multiple Form-16s. When changing jobs between financial years, employees should share salary details from the previous company to the new company using Form 12B. This helps the new company calculate taxes while issuing a combined Form-16 using Form 12B data. Failure to submit Form 12B may result in additional tax liability while filing income tax returns.

If you have multiple Form-16s, you can calculate your taxes independently. For instance, if you changed jobs during the financial year 2023-24, you will receive Form-16s from both your old and new companies. When filing returns, you need to combine the gross salary amount from both forms. Similarly, amounts for exemptions like HRA, LTA should be added to determine the total deduction amount. Subtracting allowances from gross salary will result in ‘income chargeable under the head salary’.

Apart from salary, if you have income from savings accounts, FD interest, or any other source, it should be shown under ‘income from other sources’. After this, your gross total income will be calculated. The next step involves claiming deductions like 80C, 80D. After deducting these, the remaining amount will be your ‘total income’, on which you will have to pay taxes after availing rebate under section 87A.

It’s possible that both your old and new companies considered the same deductions in Form-16. However, as per income tax laws, you can claim deductions only once on your income. The same rule applies to standard deductions. For example, if both companies have given you a standard deduction of 50,000 rupees each, then the total standard deduction will be 1 lakh rupees. But you can claim standard deduction only once, that is, only 50 thousand rupees. This applies to other deductions under sections 80C, 80D as well.

Many people make the mistake of filing returns based on the Form-16 received from the current, i.e., the new company. This leads to receiving a defective return notice. This notice comes because you worked in two companies but showed income from only one, which reflects a mismatch in income.

Having multiple Form-16s can complicate tax calculations, increasing the chances of errors. To avoid this, seek help from a tax expert or a CA. Ensure that TDS deducted matches in both forms and reconcile it with Form-26AS and Annual Information Statement available on the Income Tax Department’s website. Compare these figures with pre-filled data in the income tax return form.