How is this done?To start with, every professional has to conduct income tax declarations and allowances in April, which later needs to be validated by submitting proofs in January or February based on deadlines given by employers.
Why should an employee submit income tax proofs?By declaring your allowances at the beginning of the year, every employee is exempted from tax deductions on their CTC. However, this also means that every employee has to validate this, by submitting proof of investments which the employer requires for tax audit purpose, around January or February. It is worthy to note that, investments done for the year would be valid only for that year, i.e. any investments that are dated from 1-Apr to 31-Mar is valid only for that financial year.
What happens if an employee doesn’t submit proofs?If employee declares them at the beginning of the financial year and do not submit them, they need to pay income tax in the last 2-3 months of the financial year, which could be a huge burden. Hence, it is imperative to submit proofs in order to claim income tax benefits for the financial year.
When are invest proof submissions done?Investment proofs submission are mostly done in January/February based on deadlines provided by the employer. This might change from employer to employer. Here is the quick checklist of documents to be submitted along with respective income tax section.
Checklist of Income Tax Investment proofs:
- Investment Proofs to claim u/s 80C upto Rs 1.5 Lakhs.
- Some documents which can be submitted are: Life insurance premium receipts, PPF, Tax Saving Mutual funds, National Savings Certificates, Fixed deposits, ULIPS, Housing Loan principle etc
- Health Insurance Premiums can be claimed u/s 80D – Maximum of Rs 50,000 (sr. Citizens Rs 60,000)
- Investment Proofs to claim u/s 80CCD for NPS – Maximum of Rs 50,000
- Interest on repayment of educational loan to claim u/s 80E – No limit
- Donations made to claim u/s 80G
- HRA claim u/s 10 (13a) – Limit is as per guidelines
- Interest on home loan u/s 24B – up to Rs 2 Lakhs
- Medical Expenses on handicapped dependent to claim u/s 80DD
- Medical Expenses for specific diseases u/s 80DDB
- Investment Proofs to claim u/s 10(5) – Leave Travel Allowance (LTA) – Limit is as per grade in the company
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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