Skip to main content

Checklist for Those Switching Jobs



"Careful planning is the key to safe and swift travel". – Ulysses

The rule applies to many young executives, especially those who are forever looking for better job opportunities. But only a careful planning and following a financial checklist will give them all the benefits of the change. For smooth transition from one job to the other, you need to carefully follow this checklist:

OLD SALARY ACCOUNT

Most companies would ask you to open a new salary account. This will leave you with an extra account to maintain. The old account you opened when you were in your earlier company would lose the benefit of zero-balance facility of a salary account after three months. If you fail to maintain the required average quarterly minimum balance, it would invite penalty charges. If the account becomes non-operational for over two years, it could become dormant or inoperative, inviting additional yearly charges as a penalty. If your old salary account is linked to various investments like mutual funds, shares and loans, you may want to update the records with the respective investment company and financial institutions by giving them the new account number.

EMPLOYEES PROVIDENT FUND

You could either transfer your existing EPF account to the new employer or close the old account and open a new account. However, withdrawing the corpus and opening a new account could take around three to six months. In addition, you would be left with a smaller retirement corpus because you would lose the advantages of compounding. You would also have to pay taxes if it is withdrawn before five years. So, transferring the corpus is the better option as it would give you better tax benefit and retirement benefit.

HEALTH INSURANCE

You should check the features and benefits of the health insurance cover provided by your new employer. Check the coverage amount, whether the coverage is on a floating or individual basis, the total number of dependents covered, the list of hospitals for cashless facility and so on.


Most importantly, check the availability of the health cover during the notice period. The notice period is the period from the day one submits the resignation letter to the day one gets relieved from the job. It is normally three months. Some employers don't provide health cover to employees serving the notice period. So before entering into the notice period, one needs to make alternative arrangement for health insurance.

TAX COMPUTATION

Most employers would be computing your tax liability after taking into consideration the basic exemption limit of . 1.8 lakh and also the exemption availed under Section 80C.


So there is a possibility that your previous employer and present employer may give you these exemptions for the same financial year. You should make sure that the deductions and exemptions regarding tax liability are made only once.

Always report the income earned from your previous employer for that financial year to your new employer. This would avoid duplication and make sure one is not taxed twice or given the benefit twice, which could result in payment of a lump sum amount as taxes later. It is essential to collect the Form 16 from the previous employer as proof that one has received the tax benefits and paid the tax liabilities.

 

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now