Reporting Salary from Multiple Employers: How to Avoid Double Taxation
- Farheen Mukadam
- Aug 11
- 8 min read
When filing an Income Tax Return (ITR), taxpayers often face challenges, especially when they receive income from multiple employers. Navigating through such complex situations requires understanding how to correctly report salary income and avoid common pitfalls like double taxation. The filing process can be further complicated by the changing tax laws and regulations, which is why staying informed about the latest updates is crucial. Let us understand how to accurately report salary from multiple employers, avoid double taxation, and ensure that your filing is compliant with the latest regulatory changes.
Table of Contents
Understanding the Legal Framework
The legal framework surrounding salary taxation is governed by the Income Tax Act, 1961, under which an individual's income is categorized as taxable under various heads, with "Income from Salaries" being one of them. The Act outlines the different exemptions, deductions, and exemptions that apply to salary income, including exemptions under section 10 for HRA (House Rent Allowance) and section 80C for deductions. Understanding the legal framework helps in identifying which components of your salary are taxable and which can be claimed as exemptions or deductions.
Salary income is taxed based on the total earnings received during the year, but in cases where a person has income from more than one employer, the situation can become more complex. To avoid paying tax on the same income twice, it is essential to understand the proper tax treatment and reporting guidelines.
Steps to Report Salary from Multiple Employers Correctly
When you have income from multiple employers during the year, each employer may deduct tax at source (TDS) based on the salary paid by them. This can result in excess tax being deducted, as the TDS is usually calculated based on the salary from that particular employer alone. To correctly report salary from multiple employers, follow these steps:
Combine Your Salary Details: Gather all the salary details from each of your employers, including your Form 16s or salary slips. Combine your total income from all sources, ensuring that you have included the full amount of salary received, including bonuses and allowances.
Adjust for TDS: Each employer will likely have deducted tax according to the salary paid to you by them, but this will not account for the total salary you’ve earned across multiple employers. To avoid excess TDS, you must consolidate your salary and adjust the TDS to reflect the total tax liability.
Claim Deductions and Exemptions: If you are eligible for any exemptions (such as HRA, 80C deductions, etc.), you should claim them accurately to reduce your taxable income. You will also need to ensure that the same exemptions are not claimed twice.
File the Correct ITR Form: Depending on your overall income, you should file the appropriate ITR form. For individuals with income from salary, ITR-1 (Sahaj) is typically used if the total income does not exceed ₹50 lakh, while ITR-2 may be more appropriate if you have income from multiple employers, capital gains, or other sources.
How to Avoid Double Taxation
Double taxation occurs when the same income is taxed twice, both in India and in another country. To avoid this, here are some key strategies:
Claiming Double Taxation Relief (DTR): Under Section 91 of the Income Tax Act, if you have paid taxes in another country on income that is also taxable in India, you can claim relief by reducing the foreign tax paid from your Indian tax liability. India also has Double Tax Avoidance Agreements (DTAAs) with several countries, which allows taxpayers to avoid double taxation on the same income by allowing a tax credit or exemption.
Utilizing Section 10 Exemptions: Certain foreign income may be exempt from taxation in India, such as income earned from foreign sources under specific conditions. Understanding which of your foreign income qualifies for exemptions under Section 10 or DTAAs is critical in avoiding double taxation.
Tax Credit for Foreign Taxes Paid: If you have paid taxes in a foreign country, you can claim a tax credit against your Indian tax liability under the relevant provisions of the DTAA. This is available if the foreign income is also subject to tax in India.
Latest Regulatory Updates
The tax regime has undergone significant changes in recent years, and it’s important to keep up with the latest regulations. The key updates for FY 2024-25 (Assessment Year 2025-26) that could impact your salary filing include:
New Tax Regime Changes: The new tax regime introduced by the government offers lower tax rates but removes several exemptions and deductions available under the old tax regime. Understanding which tax regime is beneficial based on your income and deductions is critical.
Standard Deduction: A standard deduction of ₹50,000 is available to all salaried individuals under both the old and new tax regimes, which reduces the taxable income.
Revised Tax Slabs: The government may introduce changes to the income tax slabs and introduce higher exemptions or rebates for salaried individuals. Keeping track of these updates will help ensure you're optimizing your tax savings.
Increased Focus on TDS Compliance: With the increasing complexity in tax filing, there has been a greater focus on ensuring that TDS is deducted at the right rates. The government has introduced provisions to track compliance with TDS deduction to ensure accuracy in tax payments.
Common Mistakes to Avoid
While filing ITR for salary income from multiple employers, several common mistakes can lead to complications, penalties, or delayed processing of refunds. Some of the most frequent errors to avoid include:
Not Consolidating Salary Income: Failing to combine income from all employers is one of the most common errors. Ensure that you combine your total income from all sources before filing.
Incorrect TDS Calculation: Many taxpayers neglect to adjust the TDS deducted by each employer. This leads to overpayment or underpayment of taxes. Ensure that you calculate the total TDS correctly and avoid double deductions.
Overclaiming Exemptions or Deductions: Claiming the same exemptions or deductions from multiple employers can lead to the rejection of claims or penalties. Be careful to only claim exemptions or deductions you’re entitled to.
Choosing the Wrong ITR Form: Filing the wrong form, such as using ITR-1 when ITR-2 is more appropriate for income from multiple employers, can delay the process. Always check which form is applicable based on your income details.
Conclusion
Accurately reporting salary from multiple employers can be a complex process, but with proper knowledge and planning, it’s manageable. By understanding the legal framework, consolidating your salary details, claiming the correct deductions, and avoiding double taxation, you can ensure that your tax filing is accurate and compliant. Staying updated with the latest regulatory changes and avoiding common mistakes will further streamline your filing process. For assistance in navigating these complexities, TaxBuddy’s expert-assisted plans offer valuable support to help ensure that your returns are filed correctly, minimizing errors and delays. For a seamless and hassle-free filing experience, it is highly recommended to download theTaxBuddy mobile app.
FAQs
Q1: Can I claim the same exemption from multiple employers?
No, you can only claim exemptions like House Rent Allowance (HRA) from one employer during the financial year. If you switch jobs mid-year, it’s important to allocate the exemptions properly across your income sources to avoid discrepancies. Make sure you adjust the exemptions correctly on your final Form 16 to ensure your tax calculations are accurate.
Q2: How do I file ITR if I have multiple Form 16s?
When you have multiple Form 16s from different employers, you need to consolidate the total income, TDS deductions, and exemptions from all sources of income. The total salary and TDS from all Form 16s must be reported in the ITR. You must also ensure the correct adjustment of TDS from each Form 16 and account for any exemptions or deductions to avoid discrepancies in your filing.
Q3: Can I file my ITR if I missed reporting salary from one employer?
Yes, you can file a revised return to include the salary you missed reporting. It’s important to file the return accurately to avoid penalties for non-disclosure of income. If you realize that you missed reporting an income after filing your original return, make the necessary corrections by filing a revised return before the end of the assessment year.
Q4: What is the tax treatment for salary from two employers in a financial year?
If you earn a salary from two employers during the same financial year, the total salary income from both employers must be combined and reported as total income in your ITR. Each employer will deduct TDS separately based on the salary paid, but you must adjust the TDS deductions to reflect your total income accurately. The tax calculation will consider the combined salary and appropriate deductions.
Q5: What happens if I miss claiming TDS from one employer?
If you miss claiming TDS from one employer, it may result in paying extra tax, as TDS was deducted but not reflected in your final tax calculation. However, you can still adjust it during the ITR filing process, and any missed TDS will be considered when calculating your final tax liability or refund. If TDS is not reflected, you may have to pay tax on that portion upfront, but it will be reconciled in the filing process.
Q6: Can I get a refund if TDS was deducted by multiple employers?
Yes, if the total TDS deducted by multiple employers exceeds your actual tax liability, you may be eligible for a refund after filing your ITR. The ITR will help reconcile the total TDS with your actual income and tax liability. Make sure that the TDS deductions from all employers are correctly reported to claim the refund.
Q7: How do I avoid double taxation on foreign salary?
To avoid double taxation on foreign salary, you can claim relief under Section 91 of the Income Tax Act, or use the provisions of a relevant Double Taxation Avoidance Agreement (DTAA) between India and the foreign country. This will allow you to set off the tax paid in the foreign country against your Indian tax liability, thereby avoiding paying tax twice on the same income.
Q8: What is the deadline for filing ITR for salary income?
The deadline for filing ITR for individuals with salary income (without audit) is September 15, 2025. If you miss this deadline, you can still file a belated return by December 31, 2025, but you will face penalties and may not be eligible for certain benefits like carrying forward losses. It’s important to file within the extended deadline to avoid any delays and penalties.
Q9: What deductions can I claim on my salary income?
You can claim deductions under several sections for your salary income. Common deductions include:
Section 80C: Deductions for investments in PPF, National Savings Certificates (NSC), Life Insurance Premium, and Employee Provident Fund (EPF).
Section 80D: Deductions for premiums paid for health insurance.
Section 80E: Interest on education loans.
Section 10(14): House Rent Allowance (HRA), provided the conditions are met.
There are many other deductions available based on specific situations, including donations to charity and contributions to retirement savings.
Q10: Can TaxBuddy assist in filing ITR for multiple salary sources?
Yes, TaxBuddy offers expert assistance to help you file your ITR when you have multiple sources of salary income. The platform ensures that all your income is accurately reported, all TDS deductions are considered, and exemptions such as HRA are properly allocated. TaxBuddy's team of experts can help you navigate the complexities of multiple salary sources, ensuring compliance and minimizing the risk of errors or penalties.
Q11: How can I claim HRA if I have multiple employers?
If you have multiple employers, you can claim HRA from only one employer, as per tax rules. You need to allocate the HRA exemptions properly across your sources of income, considering the salary and rent paid. If you receive HRA from more than one employer, ensure that the total HRA is proportionately claimed, and TDS is adjusted accordingly in your return.
Q12: How does the new tax regime affect my ITR filing?
The new tax regime, introduced under Section 115BAC of the Income Tax Act, offers reduced tax rates with no exemptions or deductions. When filing your ITR, you must choose between the old tax regime, which allows exemptions and deductions, or the new regime, which offers lower tax rates but eliminates most tax-saving options. TaxBuddy can help you evaluate which regime is most beneficial for your financial situation and ensure accurate filing.
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