Salaried Taxpayers Switching Jobs Must Be Careful During ITR Filing

ITR filing: Salaried taxpayers who switched jobs need to be careful while filing their income tax returns. Switching jobs changes tax calculations at both companies - one that you are leaving, and the other that you are joining. Hence being aware of your tax liabilities, advance tax payments is important when getting together documents for ITR filing. According to Tanu Gupta, Partner at Mainstay Tax Advisors LLP, one of the most common mistakes employees make is failing to disclose details of salary income earned from their previous employer and the tax already deducted thereon to their new employer.

ITR filing: What to keep in mind if you have switched jobs

“In the absence of such information, the new employer generally computes tax only on the salary paid by it and may again allow the benefit of the basic exemption limit and lower tax slabs. As a result, tax may be under-deducted during the year, leaving the employee liable to pay the shortfall at the time of filing the income tax return, along with interest where the net tax payable exceeds Rs 10,000,” Tanu Gupta tells TOI. Also Read | ITR filing: How to pay zero tax under new and old tax regime - know all about Section 87A rebate The additional tax exposure can be significant where the employee has received taxable retirement benefits, such as gratuity or leave encashment, or has exercised employee stock options (ESOPs) with the previous employer. These items may increase total income and push the employee into a higher tax bracket or surcharge category. She explains this with an example: Where salary income from a previous employer is Rs 45 lakh and income from the new employer increases total annual income to Rs 55 lakh, a surcharge may become applicable on the total tax liability. Since the previous employer would have deducted tax without considering the higher aggregate income, the employee may face a substantial tax outflow at the time of filing the return. Employees should also ensure that salary income from both employers is correctly reported, TDS credits are reconciled with Form 26AS and AIS, and deductions are claimed within the prescribed limits. Particular care is required in respect of gratuity and leave encashment, as the exemption limits are cumulative and take into account exemptions claimed on earlier occasions while reporting exempt income. “A change in employment also provides an opportunity to reassess the choice of tax regime. Depending on individual circumstances, an employee may find the old tax regime more beneficial. Employee can choose now with new employer where he missed to make such choice with the previous employer,” she says. Also Read | ITR filing FY 2025-26: What is Form 26AS & what if it has errors? Things taxpayers should do to avoid getting a tax notice