𝗜𝗧𝗥 𝗙𝗶𝗹𝗶𝗻𝗴 𝗚𝘂𝗶𝗱𝗲 𝗳𝗼𝗿 𝗦𝗮𝗹𝗮𝗿𝗶𝗲𝗱 𝗘𝗺𝗽𝗹𝗼𝘆𝗲𝗲𝘀 𝗪𝗵𝗼 𝗦𝘄𝗶𝘁𝗰𝗵𝗲𝗱 𝗝𝗼𝗯𝘀

Salaried taxpayers face specific tax responsibilities when changing employers. Tax calculations change at both the old and new companies.

Common tax mistakes and risks:

  • Employees often fail to report salary income from previous employers to new employers.
  • New employers compute tax based only on new salary.
  • New employers apply basic exemption limits and lower tax slabs again.
  • Under-deducted tax leads to tax shortfalls during filing.
  • Taxpayers pay interest if net tax payable exceeds Rs 10,000.

Increased tax exposure factors:

  • Taxable retirement benefits like gratuity or leave encashment.
  • Employee stock options (ESOPs) from previous employers.
  • Higher total annual income pushing taxpayers into higher tax brackets or surcharge categories.

Filing requirements:

  • Report salary income from all employers.
  • Reconcile TDS credits with Form 26AS and AIS.
  • Claim deductions within prescribed limits.
  • Account for cumulative exemption limits on gratuity and leave encashment.
  • Reassess the choice between the old and new tax regimes.

Source: The Times of India