How should you fill your ITR form when you have shifted jobs?

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Our financial year runs from April to March. Let’s assume you changed jobs in the financial year 2022-23, working for 6 months in one company and the remaining 6 months in another. In this case, you will receive Form-16s from both companies. So, how do you file your income tax return when you have changed jobs and have two or more Form-16s? Let’s find out.

When it comes to filing Income Tax Returns (ITR), one of the most important documents required is Form-16. Form-16 is a type of tax certificate, also known as the TDS certificate, provided by the employer or company to its employees. It contains information about the income earned from salary, exemptions, deductions, and details of TDS deductions made during the financial year.

If you change jobs within the financial year, you should first submit Form-12B to your new employer. Form-12B includes information about the salary received from the previous company, exemptions like HRA, and deductions such as 80C, 80D. It also mentions details of TDS deductions. The new employer will use this information to calculate your tax liability for the entire year and issue a consolidated Form-16.

What should taxpayers check when they receive Form-16? What should they do if there is an error in Form-16?

Suppose you have changed jobs during the financial year 2022-23. In that case, you will receive Form-16 from both the new and old companies. When filing your tax return, you need to add the gross salary amount mentioned in both Form-16s. This will give you your total gross salary. Similarly, you need to add the amounts of exemptions like House Rent Allowance (HRA), Leave Travel Allowance (LTA), and other allowances mentioned in both Form-16s to calculate the total exemption amount. By subtracting the exemptions from the gross salary, you will arrive at the ‘Income Chargeable under the Head Salary’.

Apart from salary, if you have income from savings accounts, fixed deposits, or any other source, you need to show it under the ‘Income from Other Sources’ category. This will then be added to your gross total income. The next step is to claim deductions like 80C, 80D, and others. After claiming deductions, the remaining amount will be your ‘Net Taxable Income’. It is possible that both companies have taken similar deductions in Form-16, but according to income tax laws, you can claim deductions only once on your income. The same rule applies to standard deductions as well.

What precautions should be taken when claiming deductions with two Form-16s during tax filing?

After calculating the taxable income, determine the tax liability. If any TDS (Tax Deducted at Source) has been deducted in both Form-16s, include it in the tax return. You will then know the amount of tax payable, which you need to pay. If your TDS deduction is higher than your tax liability, you will be eligible for a refund. Verify the deducted TDS amount in Form-26AS and Annual Information Statement available on the Income Tax Department’s website. The TDS deducted should match.

Sometimes, you may receive Form-16 from the new company but not from the old company. In such cases, you can request Form-16 from the old company, or you may need the salary slip from the old company. By adding the monthly salary and exemptions, you can determine the income from the salary. Additionally, Form-26AS will provide you with information on TDS deducted by both companies. By claiming deductions like 80C, you can determine the net taxable income.

Many people make the mistake of showing income in the tax return based on the Form-16 received from the current company, i.e., the new company. As a result, after some time, they receive a notice of defective return. This notice is issued because they have worked in two companies but reported income from only one. This discrepancy results in a mismatch in income.

What should a taxpayer do when he receives a notice for a defective return, and how can it be rectified?

The time has come to file income tax returns. People have started receiving Form-16 from their companies. To avoid any inconvenience during the return filing process, request Form-16 from your previous company before leaving and submit it to the new company. If you don’t have Form-16 from your previous company, request it from the finance department of the company. Most companies provide Form-16 to employees by June 15th. If you encounter any difficulties while filing your return, you can seek assistance from a tax consultant or a Chartered Accountant. You can avail of exemptions and deductions only if you have chosen the old tax regime. The deadline for filing returns for the financial year 2022-23 is July 31st.