When Switching Jobs, Disclose Correct TDS Details To Your New Employer For Proper Taxation

I had worked with two employers during the last year. As I did not inform my second employer about my salary and TDS details of the first employer, there is some shortfall in tax which I need to pay. Can I directly file the e-return and send the cheque for balance tax liability to CPC office with ITR-V form?

Since you had not given details of your salary and TDS from the first employer to the second employer, both your employers have given you the benefit of basic exemption and deductions under Section 80C while deducting tax on your salary. Ideally, you should have disclosed details of your salary and TDS of your first employer to the second employer for proper tax deduction. 

You cannot discharge your balance tax liability by sending a cheque to the CPC office. You will now have to pay the shortfall in tax as self-assessment tax along with interest. This can either be paid online through Netbanking or you can pay it in an authorised bank through challan No. ITNS 280, mentioning all relevant details. Be very careful while filling up the details of your PAN and assessment year in the challan. You need to mention assessment year as 2022-2023 and not 2021-2022, which is the financial year.

I am a student and have invested in some listed shares out of my pocket money from last year. I have not yet sold any of my investments. As of now, the market value of my investments in shares has gone up compared to their cost. Should I pay any income tax on such book profits and file my income tax return?

Investments in shares are generally treated as capital assets under the income tax laws.  Any profits on such investment are taxed under the head “Capital Gains”. The liability to pay tax on your investment arises only when the investments are sold. So there is no tax liability as long as you do not sell the investment and realise profits.

Moreover, the liability to file your ITR generally arises only when your taxable income from all sources, including profits on investments before various deductions and exemptions exceeds the threshold of basic exemption, which is Rs 2.50 lakh for you.

One is generally required to pay tax only if the taxable income from all the sources, after various deductions, exceeds the basic exemption limit which is Rs. 2.50 lakh. For listed shares and equity-oriented schemes sold on stock exchanges after one year, one does not have to pay any tax on the initial Rs 1 lakh of long-term capital gains in addition to the basic exemption applicable. Based on the above discussion it must become clear to you that you need not worry about either filing the ITR or paying taxes, as long as you do not sell your investments in shares.

The author is a tax and investment expert.

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)