Tax planning when change employer during the year
Changing jobs within the same financial year is common—but it can lead to tax issues if not handled properly. Mistakes can result in: Unpaid taxes Duplicate deductions Higher tax bills at year-end Here’s how to handle your tax planning effectively when you switch jobs. 1. Share Previous Income with Your New Employer Your new employer doesn’t automatically know your earlier income. Make sure to provide: Form 16 or salary slips from your previous employer Details of tax deductions already claimed This helps ensure: Correct TDS (Tax Deducted at Source) No double tax benefits (e.g., claiming 80C twice) 2. Combine Income from Both Employers in ITR When filing your Income Tax Return (ITR): Add income from both employers Use Form 16 from each employer Include bonuses, arrears, or advance salary 💡 Remember: Income tax is calculated on your total income, not separately per employer. 3. Avoid Double Deductions Be cautious to not claim the same benefit twice, such as: HRA (House Rent Allowance) Standard Deduction (₹50,000 allowed only once) Section 80C/80D deductions already claimed earlier 4. Pay Additional Tax if Needed Switching jobs might place you in a higher tax bracket, but each employer deducts tax based only on your income with them. This often leads to a tax shortfall. Use an online tax calculator to check your final tax liability If needed, pay self-assessment tax via Challan 280 before filing your return 5. Submit Form 12B (Optional but Helpful) When joining a new employer, submit Form 12B (includes details of your previous salary and TDS). This allows your new employer to: Calculate TDS accurately Avoid over- or under-deduction of tax 6. Re-Declare Investments to New Employer If you declared investments under Sections 80C, 80D, etc., to your old employer: Declare them again to the new employer (if not fully deducted) Keep all proofs for year-end review or while filing ITR 7. Claim TDS Refund if Overpaid If both employers deduct TDS without adjusting for deductions: You might end up paying extra tax File your ITR to claim a refund 8. Consider Professional Help EzyMoneyDeals offers complete tax planning services for just ₹2,999. Their offerings include: Investment Guidance: Choosing the right tax-saving options under 80C, 80D, etc. Personalized Tax Strategy: Reduce your total tax liability Document Help: Support for collecting and submitting necessary paperwork They also provide ITR filing services starting at ₹499, depending on income complexity. 9. File Your ITR Promptly Once the financial year ends: Consolidate income from both employers File your ITR to claim refunds Avoid penalties and late fees ✅ Example Let’s say: Employer A: Paid ₹6,00,000 | TDS: ₹10,000 Employer B: Paid ₹7,00,000 | TDS: ₹15,000 Total Income: ₹13,00,000 Total Tax Due: ~₹1,70,000 Since TDS = ₹25,000, you’ll need to pay the remaining ₹1,45,000 as self-assessment tax before filing your return.
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