Form No. 122 (Earlier Form No. 12B) - Change of Employment
What is Form 122? (Earlier Form No. 12B)
Form 122 is a document that contains information about your income and the tax deducted by your previous employer. If you change jobs during the same financial year, it is mandatory to submit Form 122 to your new employer. This helps the new employer calculate the correct tax liability and deduct the appropriate amount of tax from your salary.
Importance of Form 122
Submitting Form 122 is crucial for several reasons:
- Accurate Tax Calculation: It helps the new employer to compute the correct tax liability by considering the income from the previous job, thus preventing any discrepancies.
- Avoiding Interest: Without Form 122, the new employer might not deduct sufficient tax, which could lead to a tax shortfall and subsequent Interest when filing the Income Tax Return (ITR).
Filing an Income Tax Return with Multiple Form 130s (Earlier Form 16) when you did not submit Form 122
When you did not submit Form 122 to your new employer and the filing an Income Tax Return (ITR) with multiple Form 130s (Earlier Form 16s) is slightly different:
- Combine Income: Aggregate the total income earned from all employers during the financial year.
- Consolidate TDS: Sum up the Tax Deducted at Source (TDS) amounts from all Form 130s (Earlier Form 16).
- Pay the Differential Tax if any
Many people don’t realize that their previous employers may have already deducted tax from their salary and deposited it with the tax department. The department, therefore, knows about your previous salary. This can create issues because your total salary from all employers may exceed the basic exemption limit or place you in a higher tax bracket. This can lead to penalty notices from the department, which can be a cause for concern.
