Switching jobs for higher salaries or professional growth is quite common these days. A job change can lead to better pay packages and new opportunities for career progress.
While there can be multiple reasons for switching jobs, it is important to remain aware of income tax complications that may arise due to salary receipts from multiple employers in a particular financial year.
You need to consider several factors for a hassle-free Income Tax Return filing, specifically collecting your Form 16 from each employer.
From collecting Form 16 from each employer to informing your new organisation about tax deductions applicable in your previous job, there are several factors you need to keep in mind. As the taxpayers are gearing up to file their ITR for FY 2024–25 (Assessment Year 2025–26), here is a look at the key aspects you need to consider while switching jobs.
Obtain Form 16 From Each Employer
If you change jobs in a financial year, you need to collect Form 16 from each employer. Part A of the form contains information about tax deducted at source, while Part B contains a detailed breakdown of the information about your salary and tax paid in advance. While Part A is critical for filing your income tax returns, Part B is used to check the correctness of your income and claimed deductions.
Avoid Claiming Deduction Multiple Times
One mistake taxpayers commonly make is claiming a deduction more than once. You need to calculate deductions applicable on EPF, PPF, medical insurance premiums among others and ensure that you make a particular claim only once. However, you can claim various deductions only when you choose the old tax regime. The new tax regime offers lower tax rates but quite limited deductions.
Taxation Of Gratuity, Leave Encashment
Gratuity is made available to employees who leave after working for an employer for at least five years. Under certain conditions, gratuity is exempt from taxation up to Rs 20 lakh. Similarly, leave encashment is also exempt in some cases. It is important to declare any such receipts correctly at the time of filing the ITR.
Check Form 26AS
Form 26AS contains information about the TDS by your employers. It contains information about the monthly salary and taxes deducted. The importance of this form lies in the fact that it helps you claim tax credits for all the tax that is deducted on your behalf. You need to verify the details in the Form 26AS with payslips to ensure their accuracy.