Make Form 16 work for you!

t's that time of the year when you fill up your Form 16 and submit it to the government.

But what if you have just switched jobs? And, worse, you are not sure whether your previous employer will give you your Form 16?

Here is what you need to know and do. 

It is a certificate issued to you by your employer stating the details of the salary you have earned and the tax deducted on your behalf and paid to the government. 

If you are an employee of the company (which means you are on the company's payroll), you should receive your Form 16 by April 30 every year.

If you are a consultant or a professional, you should receive Form 16AA, which gives you the details of the professional fees and Tax Deducted at Source thereon.      

How is it different from Form 16AA?

If your gross salary is less than Rs 150,000, and you don't have any agricultural income, capital gains or business/ profession, your employer should issue a Form 16AA.

This is a certificate similar to Form 16, which will act as the Return of Income (your income tax return) with effect from April 1, 2004.

Also, you have the option of filing your returns on this form. Fill in your personal details, verify and sign the form, and submit it to your employer, who will file the returns on your behalf.

So your employer will issue either Form 16 or Form 16AA, depending on your income. 

You also can file Income Tax Returns under Saral 2D or 2E (with Form 16 or Form 16AA as an attachment).

Do I need Form 16 from my previous employer to file my return?

Yes. You must combine Form 16 from your current and previous employer, and file your returns by adding the gross salary earned and the tax deducted by both employers.

Basically, when you combine two Form 16s, what you end up with is the tax payable at the time of filing your Income Tax Returns. Do remember, though, that both your former and present employers would have calculated your tax after deducting the standard deduction and basic exemption of Rs 50,000. 

This means you will have to pay some amount of income tax over and above TDS. This also means that, once your rebate is corrected, you could find yourself moving on to a highter income slab. And the higher the income, the lower the rebate.

What if I cannot get Form 16 from my previous employer?

Your best option then is to fill Form 12B and submit it to your new employer.

The employer will take into account the previous salary you earned while deducting tax.

You must fill and verify this and submit it to your new employer. You will need to furnish details of the salary you earned from your previous employer.

Verification here means verification by the employee and his signature. There is no need for the previous employer's signature.

Is it the same as Form 12BA?

Not at all.

Form 12BA is a statement showing particulars of perquisites and fringe benefits, if any. Your employer will sign and issue this form if your income is more than Rs 150,000.

What if I have submitted all my investment proofs and rent receipts to the earlier organisation?

You need to fill Form 12B, verify it and submit to your new employer. Your ex-employer does not have to enter the picture.

You can use the salary slips from your ex-employer. So you have the option either of obtaining Form 16 from your ex-employer or submitting Form 12B. 

If you cannot produce Form 16 or Form 12B, you have to re-submit the proofs of the investment if your new employer insists on it.

This will be valid only if your previous employer did not take the investments into consideration. That is, he has not already calculated your tax, taking all your Section 88 rebates (to know more about Section 88, please click here) into account.

Cnergies is an end-to-end solution provider for Tax-Payroll-HR and provident fund.

Illustration: Dominic Xavier