Home > Income Tax, Payroll > Form 16 – Salary and TDS pertaining to previous employment

Form 16 – Salary and TDS pertaining to previous employment

When employees change their job, they have the option of declaring their salary and tax on salary — pertaining to their previous employment — to their current employer for the sake of tax deduction.

When the current employer issues Form 16 for an employee, can information on salary and TDS pertaining to previous employment of the employee be shown in the Form 16?

Some tax practitioners opine that salary and TDS pertaining to the previous employment should be added to salary and TDS pertaining to the current employment, and the total amounts of salary and TDS should be shown in the Form 16 issued by the current employer.

We disagree with the above view.

We believe that salary and TDS pertaining to previous employer should not be presented in the later employer’s Form 16 for the following reasons.

1. There is no place in the current Form 16 format (as prescribed by the tax authorities) to present salary and TDS amounts pertaining to previous employment of an employee.
2. A company, while it can consider salary and TDS pertaining to another employer for the purpose of tax calculation on salary, cannot certify salary and TDS pertaining to the other company in its TDS certificate (Form 16).
3. If the previous employer salary and TDS are presented in Form 16, there will be a mismatch between data in the annexure of the fourth quarter Form 24Q and Form 16. This is because a company cannot present salary and TDS data pertaining to previous employer in its Form 24Q. The Annexure 2 of the fourth quarter Form 24Q contains nothing but details of an employee’s Form 16.
4. If TDS pertaining to the previous employment is added to the tax deducted by the current employer, the Form 16 will show a shortfall in tax remittance by the employer.

For example, let us consider the following:
Tax deducted in the previous employment: Rs. 10,000
Tax deducted in the current employment: Rs. 5,000

If in Form 16 the above two are added, the total tax deducted will be shown as Rs. 15,000 for the year, while the total tax amount remitted (by way of TDS challan payments across months) will only be Rs. 5,000 since the current company can only present the tax amount remitted by it.

This gives an incorrect picture that the employer has not remitted fully the tax amount deducted.

In short, our view is: “Consider previous employer salary and TDS for tax calculation, but not for display in Form 16.”

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Categories: Income Tax, Payroll
  1. Parthasarathy
    June 17, 2010 at 6:36 pm

    I agree with the views presented.

  2. July 1, 2010 at 6:57 pm

    My salary is 19000/- pm I want to know the amount of salary to get form 16 from my company. as my manager says that you are not entitle to get form 16. the deductions made was pf & Profession Tax.

    Please do the needful.

    Thanks & Regards

    Salim Khan

    • July 2, 2010 at 10:12 am

      If your salary is below the minimum taxable salary (Rs. 160,000 per year in case of male employees), your employer may not have deducted any tax and hence may not have issued Form 16 to you. Please note that Form 16 is the certificate of tax deducted by your employer.

      If your salary is above the minimum taxable salary and after exemptions and deductions it went below Rs. 160,000 for the year, your employer should issue Form 16 to you even if no tax was deducted.

  3. arupsingha
    July 29, 2010 at 5:35 pm

    provide the form

  4. Darshan
    May 12, 2011 at 11:43 am

    However, if I take above logic and it so happens that:
    – Total tax liability is 1,00,000
    – Out of this previous employer had deducted excess tax. Say 80,000
    – Hence, current Company deducted only 20,000

    Now say on stand alone basis, tax payable comes to Rs. 30,000.

    Here, there will be shortfall in tax if I take only current organisation data. How to check on this?

    • May 12, 2011 at 5:43 pm

      The Form 16 and 24Q will show a shortfall in tax deduction in the example you have presented above. Hence, when Form 24Q is filed, the company should attach Form 12 B (statement of income from previous employer) as an annexure to Form 27A. This is to communicate the reason for “short” deduction to the tax department.

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