Hired Mid-Year: Counting the Previous Employer’s Salary and TDS Through Form 122
An employee who changed jobs during the tax year should give the new employer Form 122 (earlier Form 12B) with the previous employer's salary, perquisites and TDS. The new employer must then deduct TDS on the combined income. If not declared, each employer deducts separately, and the employee pays the shortfall, with interest, when filing the return.
October is when many new joiners' TDS goes wrong. Someone who joined in July or August is taxed by the new employer as if their year began on the joining date, and the old employer taxed them as if they would earn its salary all year. Both can deduct too little. Under the Income-tax Act, 2025 the fix is the same as before, only with a new form number: Form 122, which replaced Form 12B from 1 April 2026. This post covers what goes in it, what the new employer must do with it, and what happens when the employee stays quiet.
The rule and the form
| Up to tax year 2025-26 | From tax year 2026-27 | |
|---|---|---|
| Law | Section 192(2), Income-tax Act, 1961 | Section 392(4)(a), Income-tax Act, 2025 |
| Form | Form 12B (and 12BAA for other income) | Form 122 (combines both) |
| Rule | Rule 26A, 1962 Rules | Rule 204, 2026 Rules |
The employee gives Form 122 to the current employer. It has three parts:
- ✓Part A: employee details.
- ✓Part B: salary from each other employer in the same tax year: taxable salary, allowances, perquisites, PF accretion where taxable, and the TDS that employer deducted.
- ✓Part C: other income the employee wants considered, a loss from house property, and TDS or TCS on that income.
Form 122 is not filed with the department. It is a declaration to the employer, who keeps it with the payroll records.
What the new employer must do
Giving the form is the employee's choice. Once it is given, the employer must take it into account. That means:
- Add the previous salary and perquisites to the salary you will pay for the rest of the year.
- Allow the standard deduction once, ₹75,000 in the new regime or ₹50,000 in the old, not once per employer.
- Apply the slab rates and the rebate to the combined income.
- Subtract the previous employer's TDS from the tax for the year.
- Spread the balance over the months left.
- Check the figures against the previous employer's payslips or relieving statement, and against Form 168 (earlier Form 26AS) if the employee shares it.
Ask for Form 122 in the joining kit, next to Form 124 (earlier Form 12BB) for investments and HRA.
When the employee does not declare it
Nothing in the law forces the employee to disclose. If they do not, you deduct TDS on your own salary only, as if it were their only income.
- ✓Each employer gives the standard deduction and the lower slabs. Each may also give the rebate, which can make TDS nil at both even though the combined income is taxable.
- ✓The gap appears at year end. The employee's Annual Information Statement and Form 168 show both employers' salary and TDS. The return must report the total.
- ✓The employee pays the shortfall as self-assessment tax before filing, with interest for short payment of advance tax where the shortfall is large enough.
- ✓The employer's exposure is limited if it deducted correctly on the information it had. Keep the written request for Form 122 on file to show you asked.
The year-end mismatch
Even with Form 122, the totals can fail to match. The usual causes:
| Cause | What goes wrong | Fix |
|---|---|---|
| Previous employer's TDS not yet in Form 168 | Credit claimed in payroll is not visible to the department | Ask the employee to follow up with the old employer's TDS return |
| Perquisites missing from Part B | Combined income understated | Ask for the previous employer's Form 123 (earlier Form 12BA) |
| Different tax regimes at the two employers | Projections on different slabs | Use the regime the employee chose with you for TDS; the final choice is made in the return |
| Standard deduction allowed twice | Taxable income ₹75,000 too low | Allow it once in your projection |
Your Form 130 (earlier Form 16) can show the previous employer's salary and TDS that you took into account, so the employee's return matches what the department sees.
A worked example
Rina joined a Vadodara chemicals company on 1 August 2026. Her previous employer paid her ₹90,000 a month from April to July. Her new salary is ₹1,20,000 a month. She is in the new regime and has no other income.
Without Form 122:
- Previous employer's projection: ₹90,000 × 12 = ₹10,80,000, less ₹75,000 = ₹10,05,000. Below ₹12 lakh, so the rebate makes tax nil. TDS: nil.
- New employer's projection: ₹1,20,000 × 8 = ₹9,60,000, less ₹75,000 = ₹8,85,000. Also covered by the rebate. TDS: nil.
Her actual position:
- Total salary: ₹90,000 × 4 + ₹1,20,000 × 8 = ₹3,60,000 + ₹9,60,000 = ₹13,20,000.
- Taxable income: ₹13,20,000 − ₹75,000 = ₹12,45,000.
- Slab tax: 5% of ₹4 lakh = ₹20,000; 10% of ₹4 lakh = ₹40,000; 15% of ₹45,000 = ₹6,750. Total ₹66,750.
- Marginal relief: income above ₹12 lakh is ₹45,000, so tax cannot exceed ₹45,000.
- With 4% cess: ₹45,000 × 1.04 = ₹46,800.
Both employers deducted nil, and she owes ₹46,800 plus interest at filing time.
With Form 122 given in August: the new employer computes ₹46,800 for the year, subtracts nil previous TDS, and deducts ₹46,800 ÷ 8 = ₹5,850 a month from August to March.
Frequently asked questions
Can we refuse to count the previous salary because it is unverified?
Ask for supporting evidence such as payslips or the previous employer's statement. Once you accept the declaration, it must go into your TDS calculation.
Is Form 122 needed if the previous employer deducted the right TDS?
Usually yes. Their TDS was worked out on their salary alone, so the combined income still needs one calculation.
Can the employee give Form 122 late, say in January?
Yes. There is no fixed deadline. The balance is then spread over fewer months, so monthly TDS will be higher.
Does the previous employer issue Form 130 for the months worked there?
Yes. Each employer issues Form 130 for the salary it paid and the tax it deducted.
Sources
- ✓Income-tax Act, 2025, full text, Income Tax Department
- ✓Income-tax Rules, 2026, full text, Income Tax Department
- ✓Form 122 replaces Forms 12B and 12BAA, TaxGuru
- ✓Old and new income tax forms compared, EZTax
This is a summary, not legal advice. Confirm current forms on incometaxindia.gov.in or with your chartered accountant.
Written by
HR Manager, Airwix Technologies (Sleet)
Nihit Dobariya is the HR Manager at Airwix Technologies in Ahmedabad, where he runs HR and payroll for the team behind Sleet. He writes about payroll, PF and ESIC, professional tax, the labour codes and everyday HR practice for Indian employers, and checks each rule against the official notification before it is published.
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