Budget: Consequences for TDS shortfall are borne by the employee who has switched jobs

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MUMBAI: A job-hop could result in the employee having to pay (penal) interest owing to a shortfall in the tax deducted at source (TDS) against salary, which has not been covered by the new employer.
The previous employer (Company A), will typically calculate the TDS based on the employee’s entire taxable income for that particular financial year. It will also take into consideration the proposed investments in eligible saving instruments under section 80-C which include provident fund contributions. After arriving at the tax liability for the year, Company A will determine the TDS to be deducted each month from an employee’s salary.
On the other hand, the new employer (Company B), will typically take cognisance of the employee’s income from the date of joining. It could also consider again in full the various tax deductions (such as those available under section 80C) that the…

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