Income Tax On Leaving A Job

When a person shifts the job in between the financial year i.e between 1^st April 2016 to 31^st March 2017 then he will get two Form 16, one from the previous company and one from new company. He might also get leaves encashed and perks.

Exemption on Encashment of Leaves for Salaried Employees: Most companies give all their employees a certain number of days which can be claimed as leaves. Therefore, in case if a person does not claim these leaves then many companies also give their employees the opportunity for en-cashing these leaves i.e. the companies pays extra to the employees for the leaves which were allowed to be taken but were not taken by them. This amount received as Leave Encashment which is also allowed to be claimed as an exemption up to a certain extent.

Income Tax Exemption on Perks for Salaried Employees: Perk is a gift made by the company to his employee in acknowledgement of the past services accomplished by the employee. Perks can either be received by the employee himself at the time of his retirement or while leaving a job, after 5 years of working with the same employer or the legal heir at the time of the death of the employee.

Multiple Form 16: When you change the job in any financial year then you need to make sure that the deductions and the exemptions regarding the tax liability are made only once. It is better to give a copy of your full and final settlement from the previous company to the new company so that the new company can take care of the tax liability and you have to refer to just one Form 16 while filing your income tax return.  Else you will have to take care of it while filing your ITR.

EPF: It is the best if you submit your UAN number to your new Company so that the new Member ID is linked with it and transfer your EPF account. If you withdraw before 5 years of contribution to the EPF the withdrawal is taxed and then you have to reverse earlier 80C deductions.

Tax Assist is a professional income tax consultancy in India for both corporate houses and individual tax payers; the latter comprising Salaried Individuals, Seafarers, Professionals and Non Resident Indians.

With the help of Tax Assist and its team of income tax professionals, taxpayers can minimize their Income Tax liability, maximize their net income and create opportunities to save for current and future needs while maintaining proper accounting standards and income tax returns which are compliant with the Law.