Changed Jobs Mid-Year and Have Two Form 16s? Here’s How to File Your ITR Correctly

Assessees who change jobs during the year often face a rude surprise at the time of filing their Income Tax Return (ITR). Both employers have issued separate Form 16s, TDS has been deducted from both salaries, yet the income tax e-filing portal suddenly shows an additional tax demand.

This does not usually mean you have been taxed twice. What it typically reflects is a gap between the tax deducted by each employer and the actual tax payable on your total income from all employers combined. Understanding how the system works – and how to correctly file your return when you have multiple Form 16s – can prevent confusion, notices, and interest.

Why Multiple Form 16s Create a Tax Mismatch

Each employer calculates tax in isolation

Every employer is required to compute TDS on salary as if:

• They are your only employer, and
• The salary they pay is your total income for the entire year (unless you formally notify them otherwise).

Because of this assumption, each employer:

• Grants the full basic exemption limit,
• Applies the slab rates as though your income is restricted to that employer’s salary, and
• May allow certain deductions or rebates separately.

When you later combine both salaries in your ITR, the total income invariably becomes higher than what each employer individually considered. As a result, your final tax liability on the combined income often exceeds the TDS aggregated from both employers.

Key Point
The portal showing a tax payable at filing is usually not “double taxation”. It arises because each employer under-deducted tax when viewed against your actual total income.

Impact of slab rates and rebates

The core reason for this mismatch is the progressive slab system and conditions for certain benefits like Section 87A rebate. When income is split, each portion may fall in a lower slab and may even qualify for rebates. When the incomes are aggregated, the assessee may move into higher slabs and lose eligibility for certain rebates.

This difference is what appears as tax payable at the time of filing the return.

Sample Illustration: Two Employers Under New Tax Regime

Consider an assessee, Mr. Sharma, who changes jobs in FY 2025-26 (AY 2026-27) and opts for the new tax regime.

• Employment with Employer X from April to September
• Employment with Employer Y from October to March

Assume the following details:

Two crucial issues arise here:

1. Standard deduction duplication
   • Each employer has allowed a standard deduction of Rs 75,000.
   • Under the law, this deduction is available only once in the year, not once per employer.