Mumbai: JOB-HOP can cause employees who have to pay (penal) flowers due to tax shortages deducted in the Source (TDS) on salary, which has not been borne by the new employer.
Previous employer (company A), will usually calculate TDS based on all employee taxable income for certain financial years.
It will also consider the proposed investment in economical instruments that meet the requirements based on the 80-C section which includes the contribution of provider funds.
After arriving with the tax liability for this year, A company will determine TDS to deduct every month from employee salaries.
On the other hand, the new employer (company b), will usually recognize employee income from the date of joining.
It can also consider full of various tax deductions (as available under the 80C section) that the previous employer has been worrying.
The end result can be a TDS reduced by company B will be much lower than employee tax obligations.
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The table below, illustrates how such shortcomings arise where each employer reduces taxes on the source, given only the salary paid by it.
As can be seen both the company A and company B have considered the entire number of standard deductions that meet the requirements and tax reduction based on the 80C section.
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