THINGS TO BE TAKEN CARE OF DURING JOB-SWITCHING

Change is inevitable. In this whole world, the only thing which is not subjected to change is ''Change''. Change is the essence of nature and sometimes it reflects a path or sign of growth. When it comes to jobs, these changes are quite common. The change with respect to jobs usually occurs due to change in priorities. Let’s take a look at the though process which goes through every individual and people related to him towards Job-Hopping.

Job hopping usually trends in the younger section of the society. However, in haste, people neglect issues associated with Income Tax returns and filings. In the moment of happiness of change in Job position of an employee, it makes them least bothered about collecting the Form 16 from their earlier employer. However, Non collection of Form 16 is not considered as a serious issue, but it enables the employees in filing IT returns in a hassle free manner due to availability of adequate information. IT returns can be filed without Form 16, provided that you collect the Pay-slips or paychecks and make your return in accordance with them.

It is important to be aware about the total TDS deducted from your income at the end of Financial Year, which can be view in a Tax Credit Statement, also known as Form 26AS through the Income Tax Portal. Always ensure to disclose the details of previous earned income to new employer as the new employer considers the income earned from the previous employer and calculate/deducts the TDS accordingly. In most of the cases, employers find it difficult to issue Form 16 in mid year; in that case the employee must insist for a tax computation statement from the previous employer and furnish this statement to the new employer. One must be aware about the fact that non declaration of previous income to new employer accounts to tax evasion which is a serious offence.

The other common problem associated with Job change is the positions of the Provident Fund Account. Provident Fund is collected both from the employer and the employee and the proceeds are transferred to employee PF Account. When leaving the Job, the employee must address the problems associated with the transfer of PF account proceeds. There are two cases with respect to Provident Fund Account.

1. Transfer the PF Account to new employer:

Inform the HR department about your will of transferring the existing provident fund account to the new company. On receipt of the Form 13 from the department fill the details of previous company like – name, address, provident fund account number and address of the provident fund office where the account was held. No signature of previous employer is required on this form. Now submit the duly filled form to the current employer so that he can initiate the transferring process. The transferring process of fund from one account to other account usually takes 35-40 days from date of submission.

1. Withdraw the amount from PF Account

Usually, withdrawals from PF account are exempt because it is mostly withdrawn at the time of retirement. However, in certain cases like change in employment, an individual may even withdraw the PF balance earlier. Such an act attracts tax liability as the PF amount is withdrawn before five years of continuous service. In such a case, payment received by an individual in respect of the employer’s contribution along with accrued interest is taxed as “salary”, and interest on employee’s contribution is taxable as “other income”. Employee’s own contribution is exempt from tax to the extent of deduction not claimed earlier. Hence, the better option would be to withdraw amount from the account after completing the 5 year of service.

THINGS TO KEEP IN MIND BEFORE LEAVING JOB:

1. Make sure to collect Form 16 from the previous employer.
2. Make arrangements to transfer existing PF Account to new employer.
3. Furnish the details of Investments to new employer.
4. Provide all the details of income earned under previous job to the new employer.
5. If Job change involves change in location, file your returns at the new location and write to assessing officer regarding the transfer of file to new location.
6. Calculate your tax liability under the new break up when changing a job.

The employees must be careful enough to look at the tax implications before moving on to other jobs. The change in the Job position may bring certain tax implications and PF Account issues which should be addressed at earlier stages; otherwise it would impose difficulty later.