Salary and employment · Tax Year 2025-26
Changed jobs this year? How to file your ITR
If you worked for two or more employers in the tax year, you add the salary from each Form 16, check that the tax deducted is enough, and claim the standard deduction only once. Here is the step-by-step.
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When you change jobs, you file one return that adds the salary from every employer for the tax year. Collect a Form 16 from each, claim the standard deduction once, count the TDS from both, and pay any shortfall. Also add what you received on leaving, such as leave encashment or gratuity, and check the details against your AIS and Form 26AS or Form 168.
The standard deduction (section 16(ia) of the 1961 Act) is worked out once on the whole salary head, not per employer, and the return has a single field for it.
The signed-off figures are for the tax year 2025-26. The figures for 2026-27 are provisional and carry forward the 2025-26 values.
Step 1: Collect your papers
- Form 16 from each employer. See how to read your Form 16.
- Your last payslip from each employer.
- Your AIS and Form 26AS (or Form 168 from 2026-27), which show salary and TDS from both. Compare these with the Form 16s.
- Settlement letters for any final payment: notice pay, leave encashment, gratuity, bonus.
- Rent receipts if you claim HRA. See documents you need to file your ITR.
Step 2: Add the salaries
Your salary income is the sum of what you earned from each employer:
Item | Employer A | Employer B | Total |
|---|---|---|---|
Gross salary | from Form 16 Part B | from Form 16 Part B | sum |
Exemptions | HRA etc. | HRA etc. | sum, within limits |
Standard deduction | once | none extra | ₹50,000 old / ₹75,000 new, once |
TDS deducted | Part A | Part A | sum |
Each Form 16 may show the standard deduction, because each employer applies it separately. When you combine them, you take it only once.
Step 3: Check the TDS is enough
Each employer worked out TDS based on the salary it paid, and may not have known about the other job. This often leaves the total TDS short of your real tax, especially if the sum of your salaries pushes you into a higher slab. You then pay the balance as self-assessment tax before filing, and interest may apply for the shortfall. In TaxCare's rules, interest under sections 234B and 234C is 1% a month, and advance tax is due when your tax after TDS is ₹10,000 or more.
If both employers deducted TDS and it exceeds your total tax, you will have a refund.
Step 4: Handle final payments from the old employer
Receipt | Treatment in TaxCare's rules |
|---|---|
Gratuity | Exempt up to ₹20,00,000 for a non-government employee |
Leave encashment on leaving | Exempt up to ₹25,00,000 for a non-government employee |
Retrenchment compensation | Exempt up to ₹5,00,000 |
Voluntary retirement compensation | Exempt up to ₹5,00,000 |
Bonus and other payments from the employer | Part of salary, as shown in Form 16 Part B |
Each exemption also has its own conditions and formula, and these caps are the upper limits. The amount your old employer shows as exempt in Form 16 is a good starting point.
For Central and State Government employees, gratuity and leave encashment on leaving are fully exempt. (The department's return checks bound government gratuity at ₹25,00,000.)
Step 5: Provident fund and other items
If you withdrew your provident fund on leaving, the AIS may show it under "Receipt of accumulated balance of PF from employer". Whether any of it is taxable depends on your facts, so check it with a Tax Expert before you file.
Perquisites from a previous employer, such as ESOP benefits, are salary. Your Form 16 Part B will show them under section 17(2).
Step 6: HRA across two employers
If you claim HRA, work it out for each period separately, using the rent you paid and the salary you earned in that period. For each period, the exempt HRA is the lowest of three amounts: the HRA received; the rent paid less 10% of salary (basic plus dearness allowance); and 50% of that salary if you lived in Delhi, Mumbai, Kolkata or Chennai, or 40% elsewhere. HRA is an old-regime exemption. You need rent proofs for both periods.
Step 7: Choose the right form and regime
Salary only, with at most interest and one house, usually means ITR-1. Compare the old and new regimes with both Form 16s combined. See ITR-1 vs ITR-2 and old vs new tax regime. Declare only deductions you can prove.
Common mistakes
- Using one Form 16 only, so the return understates income.
- Taking the standard deduction twice.
- Missing the final settlement income.
- Ignoring a TDS shortfall until a notice arrives.
- Claiming deductions in both employers' declarations that exceed the limit, such as 80C above ₹1,50,000 in total.
How TaxCare helps
TaxCare fetches your salary from the department's records, including both employers, and asks for a Form 16 only when the split is missing. It shows the combined salary, the standard deduction taken once, and the TDS against your tax. A shortfall is flagged before you file. If the case is complicated, such as ESOPs or a foreign employer, a Tax Expert can help. See Tax Experts and pricing.
This guide gives general information and is not professional tax advice.
Questions on this topic
Do I get two standard deductions if I had two employers?
No. The standard deduction is a single deduction against your total salary income. It is not given once per employer.
Do I need two Form 16s?
Yes, one from each employer. They are for the part of the year you worked with each.
Why do I owe tax even though both employers deducted TDS?
Each employer may have worked out TDS as if its salary were your only income, so the combined TDS can be short. The balance is paid when you file.
What about my PF withdrawal after leaving a job?
It appears in the AIS under a PF category. Whether it is taxable depends on facts such as the length of service. Please check with a Tax Expert.
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