The last date to file your Income Tax returns is not even a fortnight away. If you haven’t already filed your returns, then it’s the right time to start going through your bank account statements and other important financial papers to determine your tax liability and prepare your Income Tax returns.
The last date to file your IT returns is 31st July for the financial year 2016-2017 and it would be wise to strictly adhere to the deadline. Not filing your returns on time will attract a late filing penalty and may even draw scrutiny from the Income Tax Department if they suspect foul play.
The Government has made it compulsory for everyone earning more than Rs. 5 lakhs to file returns online. Trust us, this is a good move and saves everybody a good number of productive and leisure hours and also some precious paper.
We are not saying that filing taxes is a simple and easy task. That’s why we are here to help make it simpler for you, especially if you have changed jobs and need to compute income from two different workplaces.
Additional Reading: Income Tax Changes You Should Be Aware Of
The first thing to keep in mind if you have switched jobs is that you need to get hold of two Form 16s; one from each workplace. You also have to inform your current employers about deductions/exemptions claimed in your previous workplace. This is important because your current employers might draw up a big outstanding tax liability if they’re not aware of deductions you have claimed in your previous workplace.
Another way to look at it is: your tax liability is calculated based on the income you earn in a given financial year. When you change your job and do not inform your new employer about your previous income then it leads to additional tax liability. This is primarily due to the tax deductions considered by both employers.
Currently, you can avail deductions of up to Rs. 1.5 lakh under section 80C, Rs. 2 lakh on Home Loan interest, Rs. 50,000 for voluntary investments made towards NPS under section 80CCD(1b) and a few others. If both your employers consider these deductions then your tax slab will change.
We know it’s a little confusing but nothing to worry about. Here’s how you can get out of the dilemma.
If you have changed jobs, you need to prepare your total income and tax statement to ensure that you are taxed under the right tax slab. To do this, you need to consolidate income for a financial year from both your workplaces with the help of two Form 16s. The Form 16 from each company will show the various components of your salary used to calculate your tax liability and the tax deducted at source (TDS) therein.
Additional Reading: Tax Deductions Demystified
What if you don’t have your Form 16?
Do not panic! If you do not have your Form 16 then you can use your salary slips. The slips will have a break up of various components of your salary. To determine the TDS, you can consider Form 26AS. You can find this form on the website of the Income Tax Department. With details of your salary and TDS, you can calculate you tax liability or refund, if any.
If you are getting the benefit of tax deductions twice, you need to calculate your tax liability and pay taxes in advance for all the instalments due after you join a new company. If not then you’ll have to shell out interest on the outstanding tax amount.
It might seem too much to do, but there are enough and more tools out there to help you with the process. You can also approach a chartered accountant to help you out. Also, with everything online, there are a bunch of tools available online that help you compute your tax liability under all kinds of scenarios. You just have to upload your Form 16, fill a simple form with your personal and financial details and artificial intelligence will work through the web of numbers to give you the right details.
Important Tip: If you have changed jobs in the middle of the year, make sure that you don’t claim your deductions twice and maintain all the proofs.
Additional Reading: Income Tax for FY 2017-18 | Check Slab Rates, Calculation & News
With this out of the way, it’s important you make the relevant investments this current financial year to make the most of the available tax deductions. Some of your options include tax-saving Mutual Funds, tax-saving Fixed Deposit, NPS etc. You also get tax deduction on interest towards your Home Loan. It sounds like a good idea as you get to kill two birds with one stone. You get a home of your own and also tax benefits. Go on then!