When shifting jobs, the new employer assumes that you didn’t earn any income in the previous months. Tax liability will be calculated according to the income you earn for the following months that remain in the financial year. This concludes to paying lesser tax than what was supposed.
Ensure that you actively declare that salary was received for the previous months prior to joining the new company.
Here are the common reasons where you must cross-check before handing over your income tax return (as published in ET Wealth on Feb 13, 2012):
- Ignoring income from investment in the name of spouse, kids.
- Ending life insurance policy before 3 years.
- Not including interest income in your tax return.
- Selling a house bought on loan within five years.
- Not including ornaments in wealth tax.
- Receiving gifts and cash from persons other than blood relatives.
- Not paying wealth tax on second house.
- Both spouses claiming tax benefit on same expenses.
- Withdrawing PF within five years of joining a company.