Form 16 is a Certificate of salary earned by the employee which contains all the details regarding salary income and tax deducted at source under section 203 of the Income Tax Act, 1961, from its employer.
A person holds more than one Form16 in the following two situations:
- A person switches a job in the same financial year.
- A person is working with multiple employers simultaneously.
What happens when a person holds more than one Form 16?
When a person holds multiple Form 16 he should consolidate his total income from salaries from multiple employers, but in most of the cases this does not happen. It is seen that a person switches a job and does not inform the present employer about the previous employer and the details of the past Form 16. In this respect both the employers provide separate maximum exemption limit to the employee and then deduct tax at source on the taxable income. Thus less TDS is deducted and the person is liable to pay more tax. In addition to this the person is also liable to pay interest u/s 234(B) & 234(C) for the less payment of total tax liability of tax as TDS or Advance Tax.
What to do when an assessee is holding more than one Form 16?
To avoid the above situation the employee should provide all the details of income and TDS deducted thereon by the previous employer to the current employers. As on the basis of those details and current income, the current employer will calculate tax liability on the aggregate income and will deduct TDS accordingly. Moreover, if required the person can also make advance payment of tax to escape from interest on tax liability.
Thus, an individual having more than one Form 16 should must provide all the details to his current employer to avail the different tax benefits.
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