Reduce Tax – Multiple employers,Contract workers

Salaried Individuals with multiple employers

Salaried  Individuals who have changed employment during financial year 2015-2016 should declare income from previous employment to your current employer. This will enable your current employer to correctly assess your tax liability and deduct correct TDS from your salary. Declaring your previous salary earned to your current employer will help avoid shortfall in TDS on your total annual income. This will in turn help avoid interest liability on tax under-deducted due to change in employment.

Another option is to assess your tax liability from multiple employments during financial year 2015-2016 yourself and pay shortfall of TDS (if any) as advance tax.

Individuals having Contract Employment

Individuals who are in contract employment are covered by TDS provisions under section 194 J. The person hiring the contractor is only liable to deduct TDS at a rate of 10% from payments made to the contractor, if the amount of total annual payment exceeds Rs 30,000 . While the TDS rate of 10% maybe correct for individuals who are in a tax bracket of 10%, those individuals who are in a higher tax bracket of say 20% or 30% may find a shortfall in TDS. Those individuals should work out their tax liability and pay shortfall of TDS by way of advance tax to avoid interest on tax under paid.

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