Form 16 is one of the most essential documents required by taxpayers to file an income tax return (ITR) form every financial year. Form 16 is issued by the employer if tax is deducted by them on behalf of the employee’s salary. It contains details of various TDS/TCS transactions. It is mandatory to issue this form to the taxpayers.
The income tax department sets a deadline for every financial year by which all companies in India have to issue form 16 to all its employees or former employees.
As mentioned above, form 16 is issued by the employer for your earnings in one financial year. However, if you switch jobs and work under multiple employers during the same financial year, you will end up filing income tax returns with more than one form 16.
Consider this: Ravi worked for ABCD Inc. from April 1 to July 31, 2020, and then switched to XYZ Pvt. Ltd., where he continues to work for the rest of the financial year until March 31, 2021.
Ravi will be required to use multiple Form 16 given by two employers to file the returns for the fiscal year 2020-2021.
Yes and no.
Yes because multiple form 16 are required to collate your income earned and TDS deducted from multiple sources/employers. Apart from this step, the process remains the same.
If you have switched jobs within one financial year, using multiple form 16s from all those employers is essential. Here’s how to file ITR with multiple Form 16-
Step 1: Pick the correct ITR form that applies to you. Most of us file the ITR 1 form which is meant for individual taxpayers.
Step 2: You will then provide information such as your full name, address, and more.
Step 3: Next, you need to add the income earned during a financial year and enter it in your ITR form. This is where multiple form 16s will come into the picture. Here you will have to manually add the income from both the companies you worked for. Many tax filing websites allow you to upload multiple form 16s that add your income and collate other details in the multiple form 16s for you automatically.
Step 4: Over the next few steps, you will be adding details about tax deducted at source (TDS) from your salary and other deductions like House Rent Allowance travel allowance, etc. Any investments under section 80C or any other sections of 80D, 80G, etc. can be used to reduce your taxable income.
Step 5: The last step will calculate the tax payable by you if any. After paying the tax, employees can file an income tax return.
You can use Form 12B to inform your new employer about your previous earnings and investments. Form 12B can help the new employer during tax deductions and also in consolidating the salaries of both employers.
This situation may arise if you haven’t taken Form 16 from the previous employer or in case the previous company became bankrupt. In such a case, you can use the below steps to file the ITR.