It’s time of the year when everyone including your employer is worried about your taxes. Most people would have received mail from their Accounts department about “submission of proofs for investments done to claim income tax exemption”. In case you have not, it might be on its way.
This post helps you understand why salaried class needs to submit these proofs to their employers, how it should be done, what documents to be submitted and if there is a deadline?
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Why Employers Ask for Tax Saving Investment Proofs?
Employers are responsible for deducting income tax (TDS – Tax deduction at source) from the salary paid to its employees and deposit the same to income the tax department. But income tax is complicated and the final tax depends on the tax saving investments a person makes or if the person lives on rent or if he has a house. So to compute your taxes correctly your employer asks for a declaration at the start of the financial year (in April). The TDS is deducted based on this declaration.
As we approach the end of financial year, an employer wants to make sure you did what you declared as it impacts the tax calculation. So it asks you to submit proofs for income tax saving investment that you made, rent receipts along with any other documents. Once the proof is submitted the employer computes tax based on the actual investments made and TDS is adjusted accordingly.
When does Employer ask for Proofs?
There are no guidelines about when any employer should ask for investment proofs. Some companies start asking for the same in December but most of them would ask for it before the end of January. This is asked so early on as the enhanced tax deduction can be done from 2-3 months’ salary. Also, this awakens the lazy ones and they start their tax planning.
What if you do not Submit the Proofs?
In case you do not submit the proofs, an employer would not be able to give you tax benefit on your tax saving investments. This would lead to higher deduction of taxes. You can claim the refund of these taxes only during filing of tax returns.
Documents to be Submitted
Indian income tax laws are complicated and have multiple exemptions and investment options. Below is the list of documents that needs to be submitted to your employer to get relevant tax deductions.
House Rent Allowance (HRA) u/s 10(13A)
Following documents need to be submitted to claim tax benefit on HRA:
§ Rent receipt for starting and the end month and of the intermediate month in case there has been the change in rent or rented accommodation. So you need to submit rent receipt for April and Dec/Jan if there is no rent change.
§ The rent receipt must have One rupee revenue stamp on it (ideally a revenue stamp is required for receipts if the rent is paid by cash and is over Rs.5,000 but most employers still ask for it).
§ No rent receipt is required if the monthly rent paid is below Rs.3,000
§ Some employers may also ask for the copy of rent agreement.
§ If the annual rent paid exceeds Rs 1 lakh you also need to give PAN number of the landlord. In case your landlord does not have PAN card, a declaration needs to be submitted stating so.
Home Loan Interest u/s 24
§ Copy of Provisional Interest certification from Bank/Financial Institution stating the amount of principle and interest separately.
§ The certificate should also have the loan sanction date
§ Copy of Possession Certificate
§ Copy of Sale Deed (In case possession letter in not available)
§ Copy of Lease deed, in case of letting out property
§ In case of Joint Home Loan, self-declaration of the ownership proportion needs to be furnished
§ Form 12C
Medical Insurance Premium u/s 80D
§ Copy of Insurance Premium receipt paid
§ Copy of receipt for Preventive Health Checkup for self, spouse, dependent children or parents
Interest on Repayment of Education Loan u/s 80E
§ Copy of Provisional Interest certification from Bank/Financial Institution showing the interest and principle separately.
Rajiv Gandhi Equity Saving Scheme (RGESS) u/s 80CCG
§ Demat Account Statement
§ Self declaration stating RGESS enabled investments
Handicapped dependent u/s 80DD
§ Amount paid or deposited under any scheme framed in this behalf by the LIC or UTI or any other insurer and approved by the Board for the maintenance of the handicapped dependent
§ Physical disability certificate from a physician, a surgeon, or a psychiatrist, as the case may be, working in a Govt. hospital. The certificate should contain the employee’s name and percentage of Disability clearly.
§ Form 10-IA.
Medical Treatment Expenses u/s 80DDB
§ Medical Bills/expenditure incurred by way of medical treatment for a specified disease along with a certificate from a hospital in the prescribed form.
§ Form 10-I
National Pension Scheme u/s 80CCD(1B)
§ Photo copy of deposit receipt or account statement of Pension Scheme where you invest the amount.
Section 80C Deductions:
S.No. | Investment Type | Documents as Investment Proof |
1 | Life Insurance Premium | Copy of Premium Receipt. Late payment fees will not be included as premium paid For the premium falling due after submission deadline, attach previous year’s receipt with declaration (Download: Declaration for Insurance Premium Payment) |
2 | Public Provident Fund (PPF) | Copy of passbook/statement along with the cover page showing investor’s name OR Copy of the deposit challan duly acknowledged by the Bank |
3 | Senior Citizens’ Savings Scheme | Copy of passbook/statement along with the cover page showing investor’s name OR Copy of the deposit challan duly acknowledged by the Bank |
4 | NSC | Copy of the Certificates purchased during the financial year For accrued Interest on NSC – Copy of Certificates to be enclosed with date of purchase and the amount |
5 | ELSS (Tax Saving Mutual Fund) | Copy of Account Statement |
6 | Children’s Tuition Fees | Copy of receipts for Tuition Fees and Exam Fees (excluding Donations & Development fees, Bus / Transportation charges, Text Books, Private Tuitions or Tutorial Fees) paid to any University/College/School or Other Educational Institution in India during the current year for a maximum of 2 children. |
7 | Sukanya Samriddhi Yojana | Copy of passbook/statement along with the cover page showing investor’s name OR Copy of the deposit challan duly acknowledged by the Bank |
8 | Pension Plan from Insurance Companies | Copy of Premium receipt For premium falling due after Jan ’16. Please attach previous year’s receipt with declaration (Download: Declaration for Insurance Premium Payment) |
9 | Post Office Tax Saving Term Deposit | Copy of deposit receipt |
10 | Tax Saving Bank Fixed Deposits | Copy of Deposit Receipt OR Account Statement |
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