In the process of filing your income tax returns, Form 16 comes as a handy document as it has all the details regarding tax deducted by your employer on your income. Form 16 or the TDS certificate is handed by employers to employees within a quarter of the end of every financial year. The Form 16 comprises of details of your income, perquisites, tax deducted, tax saving investments, and the deposit of the same to government’s exchequer.
In case you change jobs in a financial year, the new employer will also issue Form 16 which will include details about your income and TDS details of the previous employer.
In case you only consider the Form 16 given by your current employer for tax filing, you may end up under-reporting your income and get in trouble with the taxman. All tax deducted at source against your PAN number is listed with the Income Tax Department. You can check the same with your Form 26AS, the annual tax credit statement for every individual. For multiple employers, Part A of Form 26AS will have multiple entries.
Here are a few points to keep in mind if you are filing returns with multiple Form 16s.
Change Of Jobs Can Result In Change In Tax Liability
A change in job can also result in changing your tax liability. There are chances that your tax slab would also change assuming your job switch is accompanied by an increase in your salary too. Also, not disclosing the details of your salary with the previous employer to your current employer can lead to a change in tax deducted at source and can lead to an overall tax discrepancy.
Prepare A Revised Statement Of Income
A good way to ensure your tax compliance with multiple Form 16s is by preparing a revised statement of income. Take all your Forms 16 and prepare a fresh statement of accounts by clubbing all your income for the financial year. Do not forget to add income from any other sources like interest earned on Bank Fixed Deposits etc. This will help you prepare a revised tax liability for the financial year as in line with the correct tax slab.
Double check the TDS deducted by each employer as per Form 16 and correlate the same with your Form 26AS downloaded from the income tax website. If you notice any shortfall in the payment of advance taxes by way of TDS, determine the liability as per Section 234A, 234B, and 234C of the I-T Act and pay a ‘challan’ using the income tax website. In the event of any excess TDS deducted, you can easily claim refund by filing an updated income tax return.
Use Of Consolidated Form 16
All the tax deductions on offer including those under Section 80c, 80G, 80D, 80E, Section 24, deduction for rent, PPF etc. are to be considered only once. Hence, it is important to share details of your previous salary with your current employer. This can be done by submitting Form 12b to your new employer.
The advantage of such a submission is that your current employer can hence issue a consolidated Form 16 which takes into account all previous financial details with the earlier employer. Your current employer will calculate TDS on your total salary income making it easy for you to file your ITR using the consolidated Form 16 easily.
Seek Professional Help
Do not rely just on your office accountant when faced with multiple Forms 16. If at any point you are unsure of calculating your overall tax liability, it is a good time to seek professional help. Tax consultants can help you prepare a revised statement of income and calculate your tax liability accordingly.
With the tax filing deadline nearing, it would be wise to be prepared with all the crucial documents, including form 16 from all the employers.
The writer is CEO, BankBazaar.com.