You’ll start getting mails from your respective HR asking for submission the investment, rent and/or housing loan proofs for the financial year, around Dec-Jan. A lot of you might not know why these investment proofs should be submitted to your employer.
Submitting your investment proof helps your employer to make final adjustments of TDS in your February and March salary. The employer can ensure that the TDS deducted on your annual salary is appropriate. This will help you avoid higher tax deductions while you file your tax returns. To submit the investment proofs and avail the benefits of it, the employee has to submit the declaration at the beginning of the fiscal year.
You can claim deductions on repayment of interest and principal of the home loan, by providing home loan certificate as proof to your employer. You can even submit your ELSS and other investment proofs under Section 80C of Income Tax Act. You can even disclose your income from other sources during the year like the interest from savings bank account, fixed and recurring deposit to your employer. You can further declare the capital gains that you earn on mutual funds or shares as other source of income to avoid high penalty charges.
Our Director, Mr Vaibhav Sankla’s expert view on the matter is that the employer will deduct your TDS assuming that you will be availing the possible allowances and deductions. By submitting the proof, you will validate the assumption and avoid paying extra taxes.
If you are worried and confused as to what is to be submitted as investment proofs and what will happen if you fail to submit them, fear not.