Money Checklist When Switching Jobs

Everything else on this list is smaller. These two are the ones people get wrong, and the bill arrives months later.

Should I transfer my EPF or withdraw it?

Transfer it. Withdrawing breaks the continuity of service, and continuity is what protects the money from tax.

The transfer is done online through the EPFO member portal. You use your Universal Account Number, on the Form 13 transfer claim. Your UAN stays with you across employers. Only the member ID under it changes.

Some people pick up more than one UAN across jobs. The One Member One EPF Account facility on the member portal merges the old service into your current UAN. Do that before you file anything else. A stray old UAN is the most common reason a transfer claim fails.

Withdrawing early has two costs. You lose the accumulated service period, which matters for the tax on the eventual withdrawal. And you lose the compounding on a balance that would have kept earning. Our EPF and VPF guide covers the rules. The EPF calculator shows what the balance becomes if you leave it alone.

What is Form 12B and why does it matter?

Form 12B is how you tell your new employer what your previous employer already paid you and already deducted. Give it to them in your first month.

Here is what happens if you do not. Both employers compute your tax as though they are your only employer. Both apply the basic exemption and the standard deduction. Neither knows about the other’s income. Your total deduction for the year comes out far too low.

You then discover the shortfall when you file your return, usually with interest for underpaid advance tax attached. It is a large, entirely avoidable bill.

Check your Form 26AS and annual information statement after the switch. Both employers’ deductions appear in one place. Our Form 16 and 26AS page explains how to read them. Expect two Form 16s for the year, not one.

Am I entitled to gratuity when I leave?

Only after five years of continuous service with that employer, in the normal case. Death or disablement is the exception.

The formula under the Payment of Gratuity Act is fifteen days’ wages for each completed year. Take your last drawn salary. Multiply by fifteen. Multiply by years of service. Divide by twenty-six. The twenty-six is the working days in a month.

The statutory ceiling is ₹20,00,000. It was raised from ₹10,00,000 by notification S.O. 1420(E) dated 29 March 2018. The Section 10(10) exemption for a covered employee is the least of three amounts. The gratuity actually received. ₹20,00,000. Or the amount the formula gives.

One thing to be clear about. The Department of Pension and Pensioners’ Welfare raised the maximum retirement and death gratuity to ₹25,00,000. That applies to central government employees. In the private sector your ceiling is ₹20,00,000. Headlines have blurred the two.

Four years and ten months is the moment to check. If you are close to five years, the cost of leaving early is the whole gratuity. Run the number on our gratuity calculator and read gratuity rules for the detail.

The insurance gap nobody plans for

Employer health cover normally ends on your last working day. The new employer’s cover starts when you join, and sometimes only after a waiting period.

Between those two dates you may be uninsured. If there is a notice-period break, a holiday, or a delayed joining, the gap can run for weeks.

The fix is to hold your own policy rather than relying on the group one. A personal health policy is portable, priced on your age at entry, and unaffected by employment. Buy it while you are young and healthy. It costs far less than buying at forty with a claim history behind you.

The same logic applies to life cover. Group term cover ends with the job and its sum assured is usually a small multiple of salary. See how much term cover you need to size an independent policy properly.

Equity, notice pay and the offer arithmetic

Unvested ESOPs and RSUs usually lapse when you leave. Vested options often carry a short exercise window. Miss it and you lose them. Exercising means paying cash, and usually paying tax at that point too.

Work out that number before you accept the new offer, not after. It is frequently the largest single item in the switch, and it is the one candidates forget to negotiate against. Our ESOPs and RSUs guide sets out the tax treatment.

Then check the offer properly. A higher cost to company is not a higher take-home. The split between basic pay, allowances, employer provident fund and variable pay decides what reaches your account. A large variable component is a promise rather than a salary. Use the take-home salary calculator and read CTC versus in-hand salary.

Notice pay may be recovered from you, or paid on your behalf by the new employer. Either way it changes your taxable salary for the year. Factor it into the Form 12B disclosure.