Two salary certificates in financial year 2011-2012

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sanjaymurarka

owner

56 Points Joined June 2012

A person was working in company ABC and resigned from it. He withdrew all his dues, including gratuity, outstanding leave,etc. in December 2011. The form 16(Salary Certificate) clearly mentions that tax has been deducted at source.

In January,2012, this person joined another company XYZ for about two months. Naturally, the salary earned by him in these two months will be below taxable limit and hence no tax has been deducted at source.

This person has been advised that since the tax only on Salary Certificate of company ABC will find mention in the Income Tax Department records(26AS), he can ignore the Salary Certificate of company XYZ.

Furthermore, he has been advised that he may file IT Returns only on the basis of the Salary Certificate of company ABC.

The combined income of the two salary certificates(ABC plus XYZ)is attracting additional tax which he has been advised to ignore.

What are the repercussions of such an action and what is your advice? Can any problem come up in the future?

Replies (5)

Giridhar S Karandikar

Team Lead

7558 Points Joined November 2011

Dear Sanjay, if a person changes jobs within the Financial year, then each time he changes his jobs he has to report to the current co, the income details of his previous companies, so that if any TDS is requried to be made the current co will deduct the same. Tax is requried to be paid on the combined income received from all the comapnies during the F.Y.

In your case the person has changed his job & by adding the income of the previous co he is liable to pay tax, so he will be required to pay the same. If he does not pays his tax then his case might come up for scrutiny after some years & at that time he will be requried to pay tax, so its better if he pays the addl tax now & get releived from the future possibilities.

CA Gnanika

485 Points Joined August 2007

Agreed with MR Giridhar, compute tax liablity for income earned from both the companies, Pay taxes, file returns, to avoid any future obligations.

Yajendra Adhikari

Chartered Accountant

334 Points Joined April 2009

It was the liability of the person to inform the new employer about his earnings and TDS deducted to the new Company. And, if not informed, he has to pay the tax himself because TDS deducted will be short.

Whoever has advised to file income from only one company, the person is an idiot. Please, do not do it. Combine income of both the companies and pay the balance tax.

Forum D Saiya

Employee

212 Points Joined August 2010

I agree with the discussion above

CA. Subhash Dangi

Chartered Accountant

1784 Points Joined May 2009

Hi Sanjay,

It is your bounded obligation to declare the salary income of previous employer while joining new company. In your case, U have not declared the same and hence U are liable to pay the tax on salary income of both the companies.

Repercussions: Income Tax Dept is alway open and welcome U by way of notices - scrutiny assessment in future.

Advise: Take Form 16 of the Both companies and compute the taxable income. Pay Tax accodingly (Sure that you will have to pay IT if U club togheter) and have a peace of mind and good sleep.