What are the tax implications of leaving a company in India?

Leaving a company in India can have various tax implications, primarily related to income tax. Here are the key points to consider:

1. Final Settlement and Tax Deduction: Your final salary settlement will include any unpaid salary, bonus, leave encashment, and any other dues. The employer will deduct tax (TDS – Tax Deducted at Source) on this amount based on your applicable income tax slab.
2. Gratuity: If you have been employed for five years or more, you may be eligible for gratuity. Gratuity up to INR 20 Lakhs is exempt from tax.
3. Leave Encashment: The amount received as leave encashment is taxable for non-government employees. However, there is a specific exemption limit as per the Income Tax Act.
4. Provident Fund (PF): If you have been a member of the Employees’ Provident Fund (EPF) for five continuous years, the amount withdrawn (both employer and employee’s contribution along with the interest) is exempt from tax. If withdrawn before five years, it becomes taxable.
5. Employee Stock Options (ESOPs): If you have unvested or unexercised ESOPs, it’s crucial to understand the tax implications, which can vary depending on the stage of exercise and sale.
6. Retirement Accounts: Withdrawal from retirement accounts like National Pension System (NPS) may have tax implications depending on the amount and the manner of withdrawal.
7. Form 16: Ensure you receive Form 16 from your employer. This document is crucial for filing your income tax returns and serves as proof of income and tax deducted.
8. Advance Tax Liability: If your tax liability for the year exceeds INR 10,000, you might have to pay advance tax. Failure to do so can attract interest under sections 234B and 234C of the Income Tax Act.
9. Filing Income Tax Returns: You should file your income tax return for the fiscal year, declaring all your income, including from the previous employer and any other sources.
10. Professional Tax: Depending on the state, there might be implications related to professional tax as well.
11. Tax Planning: If you are changing jobs within the financial year, it’s important to plan your taxes considering the income from both employers to avoid any surprises at the year-end.

It’s advisable to consult personally to near tax expert in India or chartered accountant near you to understand the specific implications based on your individual tax & income circumstances.