Why your tax outgo shoots up each time you switch jobs?

While some of us were busy switching jobs during the resignation wave, we forgot to report the right taxable salary to our employer. This eventually leads to self assessment/advance tax at the end which puts a lot of unnecessary pressure during the last moment of any FY.

How?? Check out the below section

1.Incorrect or non submission of form 12BB

Once you join the new employer, he/she will ask you to submit form 12BB Which includes the details of salary paid by previous employer and TDS deduction. One needs to be careful while filling Form 12BB as it will be the basis on which your employer will deduct TDS in the remaining month of the financial year.?

For example: If we have claimed a standard deduction of 50k twice by not informing the current employer. It will be charged with interest when we file our ITR(Tax slab rates on 50k+Interest on tax for the number of days).?

So overall whatever deduction you have used in your previous employment you should declare it carefully.

Compared below is an example of if an employee works at 2 companies during any FY.

2. Non submission of proofs

The proofs for a particular year's investments are usually submitted during the last quarter of the financial year. Most forget or miss the submission deadline. While HRA deduction benefits can be directly claimed while filing your tax returns, unfortunately, you can not carry forward your LTA and medical allowances. They will become taxable and would have to be added to your income before you calculate your liability.

3. Personal leaves encashment

The tax treatment differs from company to company. Some companies view that leave encashment payable at the time when an employee leaves is tax exempt as the employee has retired by resignation.

4. Withdrawing EPF

Transfer of PF from previous to current organisation is tax free. However if you withdraw the amount it becomes taxable. So it is advisable to keep PF accounts untouched until really urgent as it gives an interest rate of 7.1% annually.

Conclusion

I have burnt my hand already one time where the new employer kept on asking for form 12BB and i just gave him/her the assumed figures, because I was too lazy to submit it ???♂?. Later I have paid heavy interests+overdue taxes.

Trust me it still hurts a lot ??

But there is one thing i can bet on which is don't keep so much money with your savings account.

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