Hardik, 26, recently switched his job for the second time. He received a much better offer than his previous company and felt that his new job will give him much better scope to learn and grow. He also strongly felt that he needed a change of environment. He was not worried about finding a new job as much as he was about finding one that satisfies him. Hardik is most youngsters these days, who switch jobs more often than their parents did, for a variety of reasons.
However, the transition was not smooth for Hardik. He assumed that his previous employer will inform him about all the formalities required for his move, but they did not. This caused major confusion and difficulties like payment of a much higher income tax at the end of the financial year.
If you don’t want to end up like Hardik, take care of the formalities listed below when you change jobs.
It is a certificate that your previous employer will give you stating that you have no pending payments with them. Keep a soft copy of the same with you.
Make sure you have your EPF (Employee Provident Fund) account details handy because you will have to submit them to your new employer. They will then upload these details on the EPF portal and your account will be switched automatically.
You might have a group health insurance or a family health insurance policy from your last job. This policy will lapse when you quit. Check with your new employer if they offer another one. Get one yourself if they don’t. It offers free regular health checkups, pre and post hospitalization cover among other benefits.
Form 12B under the Income Tax Act is a form that has a record of your earlier salary, TDS, perquisites, etc. It also accounts for deductions under Section 80C, 80D, 80E. You need to obtain this form from your previous employer and submit it to the new one along with details of your investments made before the 31st of March. The new employer will then give you a consolidated Form 16. If you don’t, your exemptions and deductions will be calculated twice (once by each employer). This leads to double counting which leads to a shockingly huge tax liability at the end of the year. You can read more about form 12B and implications on switching jobs.
It is a statement issued by your employer listing details on the perquisites like loans, educational expenses, employee stock options, etc. received by you. This form is issued with Form 16. Both Form 12BA and Form 12B fall under Rule 26. Form 12BA can be downloaded from the official Income Tax Department of India website and submit it to your new employer. It is issued only to individuals with a salary of more than Rs.150000.
Perquisites or perks, mentioned in your Form 12 BA are the monetary benefits your employer gives you over and above your salary. These include ESOPs, loans without interest, credit cards, house, etc. These can either be directly given to you or reimbursed.
Although personal loans from the employer are very convenient, all employers do not provide them. If you need a personal loan for an urgent need, you can always opt for a convenient loan like the Bajaj Finserv Personal Loan, available on Finserv MARKETS. These loans can be instantly approved and disbursed within 24 hours without a collateral. With more value added benefits like minimal documentation and the ability to choose a flexible repayment period, you’re all set.
Form 16 is a form given by your employer mentioning details of the salary paid to you and the TDS deductions on the same throughout the year. It also includes requires details of your deductions under Section 80C.
Though your new employer is obligated to take into account details from your Form 12B, your previous employer is not obligated to provide it to you. You need to ask for it or download it yourself from the official Income Tax Department website.
This might look like a lot of work but it actually isn’t. You can download forms yourself and fill them with details of your salary slips, etc. Doing these processes at the time of switching itself will ensure you don’t have to run helter-skelter for help in the month of March when your only focus should be smoothly filing your IT returns and saving tax. Hence, make a note of these forms and keep the information handy, when it’s needed.
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