Financial Year 2015-16 is going to end soon and it is the time to submit your investment proofs to your employer. Investment Proofs are the documentary proofs of the investment declaration for tax planning made by the employees to their employer at the beginning of the financial year. This declaration is a provisional statement contains a list of your proposed investments and expenses that you are going to incur in current fiscal year for tax-savings.
Usually there is no prescribed last date of submitting investment proofs however, in general employers asked their employees to submit investment proofs by Mid-January to avoid deduction of additional Tax in form of TDS. This article will tell you what are the investment proofs you need to submit and what happens if you don’t submit it on time.
Why Investment Proofs are required at all?
Employer asks for investment proofs to ascertain the actual TDS deductible from your salary and to calculate TDS, he needs to know tax deductible expenses and tax-savings investments you have made so far in the current fiscal year.
What happens if you do not provide investment proofs to your employer?
Since the onus of deducting TDS (Tax) on your salary income is on your Employer and if you do not provide him your investment proofs then he is forced to deduct TDS on your whole income.
Let’s understand with an example how your Tax is ascertained with or without investment proofs by your employer. Suppose you annual salary income is Rs.6,00,000 and you have made PPF investments of Rs.50,000, repaid home loan of Rs.70,000, home loan interest of Rs.25,000 and lastly LIC and mediclaim premium of Rs.5,000 and Rs.2,500 for the current year. Now if you don not submit any of your expenses and investment proofs to your employer, your TDS would be Rs.45,000 but if you submit the proofs, you tax liability comes only Rs.19.750.
In case you could not submit your investment proofs to your employer and he deducts extra tax, than you can claim the excess TDS deducted while filing your ITR.
What are the documents needs to be submitted as investment proofs to your employer?
Before furnishing the investment proofs you should first know the eligible tax-savings investment under section 80C to 80U and the threshold limit of deduction.
List of Documents for Income Tax Investment Proofs
Section 80C Investments
|Nature of Investment||Supporting Proofs|
|Life Insurance Premium||Copy of the premium paid during the financial year and If premium falls due in the month of February or March, than submit previous year’s receipt along with a declaration stating to submit actual premium receipt before 31st March|
|PPF Contribution||Copy of Pass Book of PPF Account or Deposit Receipts stamped by the bank.|
|House Loan Principal Repayment||Bank Statement duly attested by the bank.|
|National Savings Certificate||Copy of NSC Certificate which is to be in the name of employee.|
|National Pension Scheme||Copy of Pass Book of NPS Account or Deposit Receipts stamped by the bank.|
|Sukanya Samriddhi Account||Copy of Pass Book of SSY Account or Deposit Receipts stamped by the bank.|
|Children Education Expenses||Copy of Receipt of fees paid to the educational instituitons.|
|Tax-Savings Fixed Deposits/ Post-Office Term Deposit||Copy of Fixed Deposits Ceritifcate/s.|
|Tax-Savings Mutual Funds aka ELSS||Copy of Investment Certificate containing employee name, mutual fund scheme, investment date and amount invested.|
|Stamp Duty and Registration Charges||Certificate of Completion or Registry of the house.|
|Rajiv Gandhi Equity Savings Scheme (RGESS-Section 80CCG)||Copy of the Form A submitted with the Depository Participant duly acknowledged.
Self-declaration from the employee duly attested by the Depository Participant.
|Nature of Investment||Section||Supporting Proofs|
|Previous Employer||Copy of Form 16 certifying your past incomes and deductions.|
|House Rent Allowance||10(13A)||Original Rent Receipts, having your landlord’s name and signature, for all the months beginning from the month of April or from the date of joining the organization (whichever is later).
If rent is paid in cash, revenue stamps shall be affixed on the receipts.
It is mandatory to quote your Landlord’s PAN if rent exceeds Rs.8,333 per month or Rs.1 lakh per annum.
|Interest on Home Loan||24(b)||Interest Certificate from the financial institution aka Bank duly attested by the bank.
Interest can only be claimed after completion of construction or taking possession and for this a Completion certificate or registry is required.
In case of Joint Home Loan, self-declaration of the ownership proportion needs to be furnished.
Interest pertaining to pre-construction period shall be claimed in 5 years from the year in which possession has been taken or the construction of the property is completed.
|Mediclaim aka Medical/Health Insurance Premium including preventive health check-ups.||80D||Copy of the premium paid during the financial year.
If premium falls due in the month of February or March, than submit previous year’s receipt along with a declaration stating to submit actual premium receipt before 31st March.
|Interest on Higher Education Loan||80E||Copy of interest certificate from the bank duly attested by the bank.|
|Medical Bills||Original Medical Bills are to be submitted.
Medical allowance and medical reimbursement are two different things.
Medical Allowance is a part of your CTC and is taxed irrespective of the medical expenses while in case of medical reimbursement, expenses up to Rs.15,000 can be deducted from your salary.
|Leave Travel Allowance||10||Leave Travel Allowance can be claimed twice in a block of 4 years (current block is 2014-18). The journeys are to be made in India only, no foreign travel allowed.
If you misses to claim LTA this year than you can carry forward it to next year provided you submit required travel bills to your employer.
|Medical Expenditure on treatment for handicapped dependent or for specific disease||80DD and
|Proof of expenditure incurred on medical treatment, training and rehabilitation of a handicapped dependent.
Receipt of the amount deposited under the scheme for maintenance of handicapped dependent approved by the board.
|Permanent Physical Disability||80U||Form 10-IA filled and certificate by a physician, a surgeon, an oculist or a psychiatrist working in a Government Hospital.|
|Contribution towards any approved Pension Plans||80CCC||Copy of the premium paid during the financial year and If premium falls due in the month of February or March, than submit previous year’s receipt along with a declaration stating to submit actual premium receipt before 31st March.|
Points to Ponder:
- Last date of submission of investment proofs differs employer to employer. You will get to know the last date by your employer.
- In case you have not utilized your deduction limit u/s 80C to 80U, you can do so by 31st March, 2015 and can claim the same at the time of filing ITR.
- In case you have declared investment higher than that of actual investment and your employer has deducted lesser TDS on that basis, you will have to pay the remaining tax at time of filing of ITR as a self-assessment tax.
- If you miss to submit to submit investment proofs to your employer than also you can claim the same at the time of filing ITR except those deductions which can only be claimed by your employer on your behalf i.e. LTA, medical reimbursements etc.
- It is always advisable to start your tax planning at the beginning of financial year and avoid rushing at the last time to save your hard earned money from investing in junk insurance policies or useless investment plans.