Guide to submit your investment proofs

Feb 24 2016,

Around Dec-Jan every year, you get a mail from HR about submitting the investment/rent/housing loan proofs for the financial year which sends all of us, as employees, into a bit of panic. Are you confused as to what is to be submitted as investment proof to save tax? What will happen if you don't submit on time? Worry not, follow our guidelines below and save yourself a lot of heartache.

Why submit investment proof

·         It helps your employer make final adjustments of TDS in your February and March salary

·         The employer can ensure appropriate TDS is deducted on your annual salary

·         It helps you avoid excess tax deduction at the time of filing your tax return

·         One has to submit the declaration at the beginning of every fiscal year


Investment proofs your employer needs

One can claim...

·         Deductions on repayment of principal and interest on a home loan. As proof, you submit your home loan certificates/EMI.

·         Submit ELSS investment proof/other investment under Section 80C of Income Tax Act. These include:

1.      Premium on your life insurance policies, health insurance plan, annuity received through deferred annuity plans, contributions to PF schemes, investments in certain equity stocks/debentures etc

2.      HRA by submitting your rent receipts. If rent is above Rs 8,500, then submit house owner's PAN details as well.

3.      For donation-related expenses, you will need receipts. It needs to be a tax-free one, though.

4.      To get a clear picture of your taxable salary, you can disclose your savings bank interest, fixed deposit or recurring deposit interest earned during the year

5.      Capital gains on mutual funds or shares as other sources of income can also be declared, to avoid high penalty charges later.


What if you fail to submit investment proofs?

·         In case of non-compliance, employers can cut a much higher TDS after lapse of submission dates

·         While you can still make necessary investments before March 31, they will not be reflected in your Form 16 and you will have to file for a TDS refund

·         Note, if you have mentioned certain investments, but not really invested, then you have to pay higher income tax

·         If you dont claim now for any reason, don't worry, you can claim when you file your tax returns for the year. Even though there will be some delay, the refund will come for sure.

·         Employers generally take 2-3 months to adjust these deductions from your salary or to handle any kind of inconsistency

·         Note, if you have made investments after submitting income-tax proofs to your employer, then you can claim a tax refund when filing returns

·         Tax deductions offered under various sections of the I-T Act can still be claimed, provided you invest before D-day (March 31, 2016), barring certain exceptions.


Submitting other income proofs apart from salary

·         Any capital gains from MFs, RDs, FDs, shares, rental income can help you avoid penalty

·         Capital gain proofs help get a clear picture of your taxable salary

·         I-T deductions are more accurate if you mention your additional gains

·         Declaring additional income helps you avoid penalty arising out of late payment of advance tax


For proposed investment proofs...

·         Give a declaration that you will make certain investments. Your employer will deduct TDS based on this declaration.

·         Employers accept written intention to invest in 80C instruments. But if proof is not submitted before cut-off date, higher TDS amount is deducted in the last months.

Expert view

Your employer deducts TDS on an estimated basis presuming that you will avail of all potential deductions and allowances. By submitting proof, you validate this assumption and do not pay extra taxes that you may claim a refund on.

Vaibhav Sankla, Director, H&R Block


Source: India Today

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