Why are tax dues arising despite TDS deduction?

1. Higher tax bracket due to switching jobs

Always check if the new job is putting you in a higher tax bracket. Let’s say if you are currently earning a Taxable Salary Income of INR 7,50,000 in the 20% tax bracket. And after switching jobs, your Taxable Salary Income is INR 10,65,000 which will take you into the 30% tax bracket. This could mean a substantially higher tax outgo. Which you need to communicate with your employer and ask them to deduct your TDS accordingly.

2. IFOS/Business income taking you to a higher bracket but TDS only deducted from salary income

IFOS is not accounted for when TDS is deducted. For example, if you are currently earning a Taxable Salary Income of INR 7,50,000 in the 20% tax bracket. If you have IFOS or F&O profits amounting to 2,50,00, it takes you to the 30% (higher) tax bracket, hence dues may arise.

This could also happen because the 80C deduction is taken twice. It can only be claimed once in the year.

Banks always deduct TDS on FD interest at 10%. If your income falls in a higher slab, you will need to pay TDS based on that slab. If you pay advance tax on interest income, you won't have to do it at the end of the year.

3. Avoid claiming the double deduction

Only claim tax-saving deductions and exemptions once. You can avoid this situation by submitting Form 12BB to your new employer. Just make sure that you claim only those deductions which you did not claim during earlier employment. You will be provided a 50,000 standard deduction for both the jobs, ensure that you account it once and not twice. 

You can avoid a shortfall in taxes by communicating your previous employment details (salary, allowance, deductions claimed, etc) accurately to your new employer. You can do it by submitting Form 12BB / Interim Form 16 to your new employer. Which will enable your new employer to calculate TDS accurately.