5 THINGS TO KNOW BEFORE SUBMITTING YOUR INVESTMENT PROOF

It is that time of the year where you, as a salaried tax payer, have to submit Income Tax Investment Proof in order to avoid excess tax deduction.

There are things that you must be aware of pertaining to investment proofs which an individual needs to provide to their employer at the time of tax-saving season. In case you are not aware of them, read on to get complete details on the same. It will not only help you to save tax but also ensure that you are understand why and how it helps. It can be divided in 5 basic ideas, to help you remember these things.

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Ensure that you submit the bills for your reimbursement claims

There are certain perquisites which are exempt under the Income Tax Act only if you submit the proof of actual expenses to your employer, like telephone reimbursement, reimbursement on books and periodicals, research allowance, etc. “Unless you submit the proof of the related expenses to your employer within the given time, these will be considered to be taxable allowances in your hand and you may not be able to claim exemptions while filing the tax return. Hence ensure that you submit the proof of these tax deductible expenses to your employer,” says Chetan Chandak, Head of Tax Research, H&R Block India.

Know the regulations as well as pros and cons of making investment declaration

Declaring your investment helps the employer deducting correct and appropriate tax amount from the salary of the employees. As certain investments are subject to tax exemption by declaring them the employee can reduce the tax load on their income. Knowing which investments can help you saving tax and and to what extent is important. Besides medical reimbursement and few other expenses like house rent and traveling allowance are also subject of tax exemption. Employers begin collecting the documents as proofs of investment from the month of December and January to validate the declaration made by the employees earlier. This take 2 to 3 months and the process becomes complete by March every year.

(Misconceptions can make offenders of law-abiding taxpayers)

You need to furnish proofs of investments in the month of February and March against your earlier mentioned investments

It is understandable that for premiums and investment installments that are due in March cannot always be validated with receipt or any document months ago. In case you do not have the premium receipts with you or your SIP or ELSS statement does not reflect the installments paid, you have the option of making a declaration and employers will provide you a form for this purpose. When the year-end tax filing would be done you will be given the exemptions based on the declaration made by you.

Finally, you can always get your excess taxes returned to you by furnishing the documents for investment made by you. While it is always better to declare and furnish things in time, you can always furnish investment information and supporting documents later to claim your rightful deductions

Declaration of Additional Income to the employer to avoid penal interest.

You might not be aware, but declaring your other income to your employer can work to your advantage. Other income can be in the kind of rentals from your property, interest on your fixed deposits, etc. If you declare these incomes to your employer, they can then deduct and pay the taxes on your behalf. “The important point to note here is that you may be liable to pay advance tax in respect of such additional income in four quarterly installments. Further, if you have not done this you may be liable to pay interest at 1% p.m. on the quarterly shortfalls. But the benefits of declaring this ‘other income’ to your employer is that they will calculate the due taxes on such income and pay it in the form of TDS. This will save you from the interest for default in payment of advance taxes,” says Chandak.

Do remember to submit the Proof of TDS on Additional Income.

The next important point to note is that if you have declared your other income to your employer, you should also ensure that you submit the details of tax deduction on such income to your employer. Else your employer will deduct the taxes due at full rate and this will result in you paying excess taxes.