• Employee Name: John Doe
• Home State: Karnataka
• Employer 1: Company A (Salary Rs. 1,00,000 per month)
• Employer 2: Company B (Salary Rs. 50,000 per month)
• Financial Year: 2023-2024 (AY 2024-2025)

Step 1: Calculate Total Income

Total Salary = Salary from Company A + Salary from Company B = Rs. 1,00,000 + Rs. 50,000 = Rs. 1,50,000

Step 2: Apply Standard Deduction and Other Exemptions

• Standard Deduction (applicable to all salaried employees) = Rs. 50,000
• Other Exemptions (e.g., HRA, LTA, medical insurance) = Rs. 25,000

Step 3: Calculate Taxable Incometax

Taxable Income = Total Income – Standard Deduction – Other Exemptions = Rs. 1,50,000 – Rs. 50,000 – Rs. 25,000 = Rs. 75,000

Step 4: Determine Applicable Tax Slab

As per the current income tax slabs for FY 2023-2024, the applicable tax slab for John Doe is:

• 0-5 lakhs: 0%
• 5-7.5 lakhs: 5%
• 7.5-10 lakhs: 20%
• Above 10 lakhs: 30%

John Doe’s taxable income falls in the 5-7.5 lakhs bracket.

Step 5: Calculate Tax Payable

Tax Payable = 5% of Taxable Income = 5% of Rs. 75,000 = Rs. 3,750

Step 6: Tax Deduction by Employers

• Company A can deduct tax based on John Doe’s full salary and his claim for exemptions.
• John Doe can choose oneincome tax employer (either A or B) to deduct tax based on his aggregate income considering both salaries.
• He needs to submit Form 12B to the chosen employer, declaring his income from both sources.

Tax Calculation by Company A (Considering Full Salary):

• Taxable Income = Rs. 1,00,000 (excluding exemptions)
• Applicable Tax Slab = 20%
• Tax Payable = Rs. 20,000

Tax Calculation by Company B (Considering Aggregate Income and Opting for Form 12B):

• Total Income = Rs. 1,50,000
• Standard Deduction and Other Exemptions = Rs. 75,000
• Taxable Income = Rs. 75,000
• Applicable Tax Slab = 5%
• Tax Payable = Rs. 3,750

                  FAQ QUESTIONS

Q: Do I need to pay tax if I have multiple employers?

A: Yes, you need to pay income tax on your total income from all your employers. This means combining your income from all sources and paying taxes based on the applicable tax slabs.

Q: Who will deduct tax from my salary?

A: Each employer will deduct tax (TDS) from your salary based on your salary structure and tax income taxexemption details you provide them. You are responsible for informing each employer about your income from other sources to ensure accurate tax deduction.

Q: What happens if no tax is deducted from my salary?

A: Even if no tax is deducted from your salary, you are still liable to pay income tax on your total income. You will need to file an income tax return and pay any outstanding taxes, along with interest and penalty for late payment.

Q: What documents do I need to file my income tax return with multiple employers?

A: You will need Form 16 from each of your employers, which details your salary and tax deducted. You will also income taxneed to provide details of any other income sources, such as interest income, rental income, etc.

Q: Can I claim any deductions or exemptions for having multiple employers?

A: You can claim all the standard deductions and exemptions available under the Income Tax Act, regardless of the number of income taxemployers you have. However, you cannot claim the same deduction or exemption twice.

Q: What happens if I change jobs during the financial year?

A: If you change jobs during the financial year, you need to inform your new employer about your income from the previous employer. This will help them calculate your tax liability accurately. You will need to include income from both employers in your final income tax return.

Q: How can I avoid underpayment or overpayment of taxes with multiple employers?

A: Here are some tips to avoid underpaying or overpaying taxes:

• Inform all your employers about your income from other sources: This will ensure accurate tax deduction.
• Estimate your total taxable income: This will help you understand your tax liability and avoid any surprises at the time of filing your return.
• Pay advance tax: If you expect to have a high tax liability, you can pay advance tax in instalments to avoid interest penalties.
• Seek professional help: If you have complex tax affairs, consider seeking help from a tax professional.

                      CASE LAWS

1. Section 192 of the Income Tax Act: This section income taxmandates employers to deduct tax at source (TDS) from salaries paid to their employees. It applies to all employees, regardless of whether they have single or multiple employers.
2. Exception for multiple employers: However, there is an exception income taxto this rule under Section 192(2)(b). It states that if an employee employed by multiple employers furnishes a certificate in the prescribed form, declaring that they will get enrolled under Section 6(2) and pay tax themselves, then the employers are not obligated to deduct TDS from their salaries.

Case Laws:

• CIT vs. M.L. Puri (1985): This case established that the onus of proving that an employee is employed by multiple employers and has opted out of TDS by furnishing the necessary certificate lies with the employee.
• DCIT vs. B.L. Taneja (2001): This case clarified that the certificate provided by the employee must be in the prescribed form and submitted to all employers beforeincome tax the beginning of the financial year.
• ITO vs. A.K. Goel (2006): This case confirmed that the employee must be genuinely employed by multipleincome tax employers for the exception to apply. Casual or temporary engagements do not qualify.

Key points to remember:

• An employeeincome tax working for multiple employers can opt out of TDS by submitting a certificate in the prescribed form.
• The certificate must be submitted before the financial year begins.
• The employee must be genuinely employed by multiple employers.
• The employee is then responsible for enrolling under Section 6(2) and paying tax themselves.