It is that time of the year when you’re supposed to share your investment declaration proofs with your employer. While there are sufficient ways to make tax-saving investments, you will need to declare it to your employer by submitting the required proofs or supporting documents to claim these deductions.
But what proofs are required to be submitted? And what happens if you fail to give these proofs on time?
To ensure that an adequate amount of TDS is being deducted from your salary, let us discuss income tax declaration and the alternatives that are available if you fail to make these investments or submit your proofs on time.
What Is TDS?
Let’s start with understanding the basics of tax planning during a year.
Now, all salaried individuals might be aware that at the beginning of the financial year, during the month of April, employers usually ask their employees to submit a provisional declaration of all the investments or expenses that they will be doing in the entire financial year in order to save their taxes.
After receiving this provisional declaration, the employer calculates the employee’s tax liability. Accordingly, it gets divided between 12 months, and a TDS amount is deducted from the salary every month.
Once you’ve reached the month of December or January, your employer will ask you to submit proof of the provisional declaration that you had given earlier. In case you fail to submit the proof, your employer will deduct more TDS in the later months since your revised tax calculation will now be higher as you have not done the investments and expenses that you shared at the beginning of the financial year.
Thus, more taxes need to be paid from your end and that is why in the remaining months, more TDS will be deducted from your salary.
This definitely means that you will take home a lesser salary in the last part of the financial year. So, let us discuss what documents you need to submit as part of your investment declaration.
Documents required to be submitted for investment declaration
- House Rent Allowance (HRA)
If you are someone who is claiming HRA, that is, if you stay on rent and you want to claim HRA exemption from your salary, then you need to submit a rent agreement or rent receipts or both, depending upon what your employer is asking you to submit.
Usually, it is either of the two, but make sure to check it with your employer. Also, note that if the rent you’re paying is more than 1,00,000, you will also have to submit the pan number of your landlord.
- Leave Travel Allowance or Concessions (LTA/LTC)
In case you are claiming LTA, you will have to submit air tickets, rail tickets, or any proof of your commuting to a destination. This might include your own tickets along with the tickets of your family members if all of you are traveling together. So, make sure that you submit these tickets to your employer.
- Deductions Under Section 80C
The limit for claiming a deduction under Section 80C is 1,50,000. There are ample options here to claim as a deduction under Section 80C. For example, suppose you are claiming a tuition fee. In that case, the tuition fee receipt is what you need to submit, or in case you are paying a certain premium for life insurance policies, then give that insurance premium receipt as proof.
You can also give a housing loan certificate which has a bifurcation of your principal payment and interest payment. This particular document is required for claiming the Section 80C deduction as well as the Section 24B deduction.
Your home loan certificate is basically the home loan interest certificate that the bank issues to you. But currently, if you ask them, they will ordinarily give you a provisional certificate which will have the bifurcation of both components.
If you’re investing in ELSS mutual funds, you must submit your account statement. Similarly, in case you are investing in a fixed deposit, then you need to submit your fixed deposit receipt, and for Public Provident Fund, again PPF passbook is what you need to submit. You can share a screenshot or photocopy of the passbook.
For investments in schemes like Sukanya Samriddhi Yojana, you will have a passbook or account statement. You can submit that to claim the deduction.
- Deductions Under Section 80D or 80DDB
If you are paying a certain premium for health insurance, then you can actually give a premium receipt, or in case you are claiming Section 80DDB, i.e., medical treatment expenses, then medical bills are something that you need to submit again.
- Deductions Under Section 80U or 80DD
Section 80U or 80DD is a provision for disability. Here, a disability certificate from the hospital must be submitted as proof of medical disability. That is the reason for claiming this particular deduction. Here, medical bills are not required. Only the proof of the disability and the extent of the disability should be mentioned clearly on that specific certificate.
- Deductions Under Section 80E
In case you have an education loan, the interest on that loan can be claimed as a deduction. And for that, you can submit an interest certificate issued by your bank or financial institution. This comes under section 80E.
- Deductions Under Section 80G
Next is your donations which come under 80G. So, an NGO’s donation receipt must be submitted here.
- Deductions Under Section 80CCD
An NPS account statement is required if you have invested your money in NPS.
- Let out property
If you are earning any rental income, that also needs to be declared. You can show your actual rent receipt, or you can show it in the account statement also. Apart from that, if you have paid any property tax, you can submit your property tax paid receipt to your employee.
So, this was a list of documents that you need to submit to your employer this time of the year.
What if you don’t submit these investment proofs?
There is a possibility that you could not make certain tax-saving investments or expenses majorly because this year, inflation has been really high, and it was challenging for many of the households to manage their cash flow.
So, whether because of this or any other reason you could not make those investments, your employer will deduct more TDS in the coming months as you won’t be submitting any proof.
Although, if you fail to make your investments, your employer will deduct more TDS from your salary in the next 3 months, you can still make those investments before 31st March 2023. Moreover, at the time of filing your income tax returns, you can file your declaration and claim for a refund from the income tax department. Refund usually takes 3-4 days in normal circumstances.
So, the more TDS that your employer has deducted because you could not submit the documents on time, the same thing can be claimed at the time of filing your income tax returns.
Make sure you submit all your proofs to your employer to claim the maximum tax deductions possible. But again, if you have yet to make any investments so far, you have another opportunity to claim these investments declaration as you have the time to make these investments till 31st march.
In case you do not want your in-hand income to get reduced in the coming months, ensure that you submit your proofs on time and don’t delay any further.
Disclaimer: The views expressed in the blog are purely based on our research and personal opinion. Although we do not condone misinformation, we do not intend to be regarded as a source of advice or guarantee. Kindly consult an expert before making any decision based on the insights we have provided.
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