If you are switching jobs in the middle of the Financial Year, then you will have multiple Form 16s. Thus, while filing your personal Income Tax return you will come across with paying additional taxes if the income is not clubbed.
As per the Income Tax Act, it is advisable to disclose the income of your previous employer with your new employer and let the new employer deduct Income tax on the consolidated amount.
Here’s a step-wise approach to consolidate your income-
- When you resign from the company ensure to submit all your tax saving proofs with your employer before he runs the Full and final settlement. This proof should be pertaining to period from 1st April till the last working date.
- After resigning get the following documents from your past employer –
- Full and Final Settlement sheet
- Final Tax computation sheet
- Reliving letter
- Experience letter
3. You need to submit Final Tax computation sheet from past employer and Form 12B to your new employer. Once you present the Form 12B, it helps the employer to furnish a consolidated Form 16 at the end of the year based on the details provided Form 12B.
4. At the end of year when your current employer ask to submit actual proof, then ensure to submit all your tax saving proofs from 1st April to 31st March.
- a) Proof pertaining u/s 10, like medical, HRA and LTA is paid through salary, for this allowance employees gets exemption with their respective employer only.
- b) Benefits u/s 80’s, like LIC, PPF,80D, etc can be managed through current employer. This means here you can submit tax saving proofs from 1st April to 31st March
5. Once the financial year is closed, companies file their eTDS returns against which employees Form 16 is issued.
6. The Form 16 issued by current employer will show all your consolidate income from past employer with all the tax adjusted.
7. Now, get ready to file you taxes latest by 31st July using this Form 16 issued by current employer.