If you are planning to switch jobs or already moved to a new company for better pay, then this article on why and how to report salary income incurred from previous employer to current organization might help you.
In case you have worked for two or more companies during the previous year, then you can report your total salary income incurred from previous employers to the current organization.
Based on your declaration, your current organization will recompute your tax liability to be deducted (TDS) on total salary income for the whole year.
If any differential amount of tax to be deducted due to the addition, then it should be deducted and deposited by your current organisation against your permanent account number or PAN.
If you don’t disclose your salary income incurred from previous employers to current organization, then tax will be calculated based on the current salary income earned from present company. This means earlier salary income incurred from previous employers will be ignored or considered as zero, resulting underpayment of tax.
Is it mandatory to report previous employer salary income to the current organization?
No, it’s not mandatory that you should report your previous employer salary income and TDS amount deducted out of it to your current organization.
However, it’s always advised to report it to the current organization while joining the organisation or within a month of joining. Otherwise, non disclosing may let you recompute your tax liability while filing IT return and deposit the differential tax amount along with interest penalty.
What happens if i don’t pay differential tax amount to government?
Company has to file quarterly TDS return in form 24Q for the TDS amount deducted and deposited on salary income of employees. Based on these returns, government will know how much you have incurred as salary income during the financial year.
If your tax liability is less due to not considering previous employer salary income, then chances are that you will get a notice from the department to pay the differential amount with interest penalty if any.
If employee has disclosed previous employer salary income, then current organization must take it into account while calculating final tax liability. Any excess or shortfall can be adjusted by the current organization.
In case you have not disclosed it, then current organization will consider salary paid by them as your income.
As per the provisions of section 192, employer is required to deduct tax on the amount payable at the average rate of income tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the individual.
How to declare a former employer salary to the current organization?
As per the provisions of section 192, employee may furnish his/her salary details from previous employer to current organization. If he has decided to furnish it to present organization, then it has to be in form 12B.
You can fill up these details on your own from your monthly salary slips. Mentioning details in Form 12B helps the current organization to calculate your tax liability accurately.
How to know the amount of tax my employer has deposited in my account?
The IT department maintains a tax credit statement in form 26AS. This statement consolidates all the details to know exactly how much tax credit you have incurred during the whole year.
TDS on salary deducted by your current organization and previous employers must reflect in form 26AS.
This form gets updated every quarter after your organization files TDS return for the quarter. For instance, if you want to see tax deducted from January months salary in the month of February, then you will not get it. As employer will be filing TDS return for the period of January to March on or before the due date of May 30th. After may 30th or filing of TDS return, you can see the deducted TDS amount in form 26AS.
Before filing your IT return, you have to check form 26AS online to know whether exact amount of tax has been deposited or not. In case of any discrepancies, you can take up the matter with the deductor.
How to pay tax if TDS not deducted on previous employer salary?
If you haven’t disclosed your previous employer salary income, then there are chances that tax would have less deducted by the current organization.
In such a situation, you can wait for form 16 to be issued by both employer. After knowing exactly how much tax deducted and salary breakups, you can recalculate by considering all the benefits available to you such as house rent allowance exemption, standard deductions under section 16, deduction under chapter VI-A and slab rates.
If it resulted in some tax payable, it must be paid as self assessment tax along with interest if any by using challah number 280.
What to do if previous employer not deposited TDS deducted from salary income?
Organizations are required to deduct TDS amount from their employee’s salary income if its exceeded the maximum amount not chargeable to tax.
Before taking any action on employer for not depositing TDS with government, you first have to make sure that your taxable salary income is exceeding the maximum amount not chargeable to tax.
For the financial year 2018-19 and 2019-20, maximum amount not chargeable to tax is Rs 2,50,000 for an individual who is not a senior citizen. It’s also referred to as basic exemption limit.
If your salary income is taxable and employer has deducted but not deposited TDS amount with the government, then you can take up this matter with the organisation who has deducted but not deposited. If they didn’t respond, then take up this matter to the assessing officer.
Towards the end of the year, you can also declare interest income from saving and fixed deposits, losses if any from house property in order to calculate your exact tax liability. For these, you need to submit supporting documents to your employer to satisfy them that your claim is genuine. If you have not reported these details, then you can show it in your IT return while filling.
Do employers check previous salary income?
After submitting your salary details in form 12B to the current organisation, your employer will recompute your tax liability accordingly. He will not cross check details submitted by you with your previous organisation. However, your previous organisation might have disclosed your salary details to the IT department based on your income and TDS amount deducted. If you have disclosed lesser income, then you may get notice from IT department for short payment of tax.
However, in general your employer may ask you for previous organisation’s salary slip to cross check whether the hike you got is actually genuine or not. They may engage third party consultancy to do a background check for the genuineness of your engagement with previous employer.