Essential Income Tax proofs: As the New Year has begun, March is approaching i.e., the end of financial year. Every organisation gear itself for the next year by preparing budgets, deciding the targets, new plans & policies to work on and many other agenda’s on the list. One among these is payment of income taxby the employer as per the income declared.
While paying tax every individual or firm wants to claim deductions so that they can save a little amount. In order to avail the benefits of deductions under the Income tax act 1961, one must know that employer should deduct the tax on monthly basis and deposit to the government.
This is calculated according to the salary of the employee and how he/she is planning to reap the benefit of tax savings.
The employer asks from employees for declaration of the planned investments for tax deduction purpose in the beginning of the financial year. Based on your declaration and the investments that pass the tax deduction criteria your employer deducts tax on your salary every month.
Employers ask for the proofs because they need to calculate how much will be your final salary after removing the deductions.
One needs to provide various supporting documents under section 80 C. These documents serve as the basis for claiming the deductions and minimising the tax. Various proofs required are as follows:
- Contribution towards PF: This is the sum that gets deducted from your salary, if you are contributing your amount in Employee’s Provident Fund scheme.
- Tuition fee paid: Any sum paid towards the tuition fee for the education of children (maximum 2) can be claimed for deduction under section 80 C. This payment made could be in favour of play schools, formal schools, colleges, universities or any other educational institutes or body in India.
- Repayment of home loan: Any instalment made towards payment of principal amount taken as a loan from bank either for buying or building the property can be claimed for deduction.
- Life insurance premium: Amount paid as a premium for life insurance policy for self, spouse or for children also accounts for deduction under the section 80 C. From 1st April 2012, if the premium is less than 10% of sum assured, full deduction can be claimed.
- Any contribution made towards public provident fund with the copy of passbook.
- ELSS Mutual fund statement.
- Copy of NSC certificate and copy of tax saving bank deposit receipt.
- Copy of SukanayaSamridhi account passbook.
- Post office deposits with more than 5 years.
- Tax saving fixed deposits with scheduled banks.
- Tax saving funds with the copy of certificate having name of the investor, date of investment, type and amount invested.
- Pension plan from the other insurance companies.
- Leave Travel allowance (LTA): LTA can be claimed twice in a row of four years, you need to submit the travel tickets or bills to claim this. You can carry forward the unclaimed LTA to next year. Current LTA block is 2014-2018.
- House Rent Allowance: Rent paid on monthly basis & rental agreement having the name of landlord, address and signature. If you are paying more than one lac annually than PAN of landlord should also be submitted.
- Contribution towards NPS(Section 80 CCD): copy of passbook reflecting the payment made towards National Pension system account and stamped deposit receipts.
- Medical allowance(Section 80 D): If your employment agreement has medical allowance, you need to submit medical bills, doctor’s prescription all the supporting documents should be original no photocopy is allowed.
- Medical treatment of handicapped dependent: under section 80 DD one need to submit copies of medical bills with completed 10-IA form.
- Medical treatment of specific disease: Expenditure incurred on the treatment of any specific disease along with the bill form hospital in prescribed manner as per the act.
- Higher Education Loan(Section 80 E): Copy of loan certificate reflecting the instalments paid.
- Donations (Section 80 G): Receipts of donations, basically receipts issued by the charitable institutes when you are making donations in favour of that particular organisation. You can’t claim for deduction if the amount is paid in cash more than 10000/-(Ten Thousand).
- Deduction (Section 80 TTA):This Section is applicable to individual taxpayers and HUF only. This benefit is not available to a firm, an Association of Persons, a Body of Individuals, LLP or Company Assessee. The deduction allowed is interest received on eligible saving accounts or Rs. 10,000 whichever is lower.
- In case you were associated with some other firm in the previous year than also you need to provide details which are as follows:
- Form 12B with copy of Form 16 with full and final tax computation submitted by you to your current employer.
- Copy of Form 16 with full and final tax computation certifying your earnings and Deductions from your previous employer is essential.
Apart from these proofs thing that has to be kept in mind is, if you declare the investment more than the actual one you have to pay additional taxes while filling the return and if it is less you can claim for refund.
You need not to submit the investment proofs while filling for the income tax returns. As such no criterion has been defined by the government which document has to be submitted and which not;it solely depends on the individual.
If you won’t submit the right documents on time, it will become difficult for the employer to provide you tax benefit and you will end up paying higher tax.
It is always advisable to collect right information from the accounts department of your organisation because every organisation will have different policy and own set of rules to full fill the need of an hour.
Remember to keep the documents ready before hand and avoid delays. Always keep copies of your original documents for your future references.
Do not miss the deadline set by the employer and make the financial year hassle free.
Hope this article helped you in enhancing the knowledge about the documents that need to be submitted. Happy Tax Savings!!!!!