Changes in tax liability because of job switch and u/s234C penalty calculation

I have changed my job in the month of Nov 2023. Based on my previous employer salary my tax liability was approx. 85000 rupees. But my tax liability changed to approx. 150000 rupees. When I changed my job I didn’t provide form 12B from my previous employer to new employer for tax calculation purpose. Now I am getting u/s 234C penalty for the the first two quarters also. As my tax liability at that time was based on my previous employer salary. Why I should need to pay for that period because of new salary? How can I pay tax for the future increased earning? Isn’t it wrong? Looking forward for your guidance.

Hi @suraj.jaj07

When you change a job, it is essential to provide Form 12B to your new employer, which includes details of your income and tax deductions from the previous employer. By not doing so, your new employer calculated your tax liability based solely on your current salary, without considering your previous income.

As a result, the tax liability calculated by your new employer was lower than it should have been, leading to a shortfall in the amount of TDS. And now it is subject to penalty under section 234C of the Income Tax Act, which is why you are now facing penalties for the first two quarters.

All your tax liability is based on your total income for the financial year, which includes income from all sources, including your previous job. By not disclosing your previous employer’s income and deductions, your new employer was unable to accurately calculate the correct TDS.

Hence, you need to pay the applicable penalty under section 234C.

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