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For all the salaried employees, the HR department of your organisation would start bombarding you with emails and phone calls to submit the proofs of all the investments made and expenditures incurred which are eligible for tax deduction. This is a follow up exercise on the provisional statement submitted by you at the beginning of the financial year for the proposed investments to be made during the course of the year.
Things to know:
Under the Income Tax Act, an employer is obligated to compulsorily withhold a portion of the salary of all its employees as tax deducted at source (TDS). Thus, in order to avoid excess tax collection, employers take a provisional statement and calculate TDS on your net income after adjusting the deductible investments and expenditures. This helps avoid excess tax collection resulting in refunds later. You can check the same from your 26AS form available online in the official IT website.
Now, with the financial year coming to an end, employers start asking you to submit the proof of investments made by you. This is to ensure that they have calculated your net tax liability accurate and investments made by you are in line with the provisional statement provided by you. And in case of discrepancy resulting in any change in the total tax liability due to change in investments, it can be adjusted in the salary due to be paid in the last few months.
Though there is no specific date prescribed by the law for submission of investment proofs and it totally depends on your employer. However, most employers start asking their employees to submit investment proofs from the month of January and usually such proofs need to be submitted by latest by the 10th of March. The onus to submit these investment proofs is solely on the employees and failure to do would result in employers charging TDS on your total annual income without any tax deductible benefits.
Ideally, if you have made your investments then you should submit the receipt of such proofs as soon as possible. The best way is submit the receipts of all the investments is by checking your provisional declaration and submitting them in the same sequence. Proper numbering and following the same sequence as submitted in the provisional statement will avoid confusion and also ensure that you have not missed out on submitting any document.
Though the list of documents that needs to be submitted would vary for each one of you depending upon the investments made and expenditures incurred by you but the most common documents which you should remember would include:
List of documents for the income which is exempt from taxes would include:
- If HRA is a part of your compensation package then the rent receipts to claim HRA exemption
- Medical bills to claim medical expenses
- Travel tickets to claim leave travel allowance
You need to know your total allowance and then submit the necessary proofs accordingly.
List of documents for the investments made or expenditure incurred which are eligible for deductions under Section 80 would include:
- If you have a housing loan then the interest and principal repayment certificate from the bank or financial intuition to claim deduction for repayment of housing loan. Principal repayment upto Rs 1.5 lakh is deductible from tax and a deduction of Rs. 2 lakh is allowed towards interest repayment of such loans.
- First time homebuyers are entitled to an additional deduction of Rs 50,000 (u/s 80EE) over and above the 3.5 lakh per annum.
- Updated PPF passbook or duly stamped PPF deposit slips for investments made in PPF for the current financial year
- All life insurance premium receipts for premiums paid in the current financial year
- FD receipt for investments made in fixed deposits
- Bank account receipt or updated passbook for deposits made in Sukanya Samridhi account
- Copy of purchase of NSC certificate
- Tuition fees receipts of children
- Statement of investments made in ELSS either in lump sum or SIP
- NPS deposit statement for investments made in NPS
- Medical insurance premium receipts to claim deduction under Section 80D for medical policies for you, family and/or parents and bills of money paid for preventive health check-ups
- Bank certificate for interest payment of education loan
- Donation receipts with complete details about the recipient to claim deduction for donations made to specific trusts and/or funds
Remember, none of these receipts need to be submitted to the income tax department while filing but you still have to submit all the documents related to your investments to your employer in order to avoid paying extra taxes. If you fail to submit these investment proofs to the HR department of your company within the specified time frame, then your employer will not pass on any tax benefit irrespective of such investments made by you. In order to avoid such a situation it is always advisable to submit the receipts of such investments at the earliest rather than waiting till the end.
