With your company's accounts department knocking on your door to submit your income-tax saving proofs, it's time now for you to gather all the relevant papers.
Since April of last year, the department would have been computing taxes on your salary based on the proposed investment declaration submitted by you earlier.
The taxes deducted at source (TDS) are covered under Section 192 of the Income-tax Act, 1961 making it the obligation of the employer to withhold taxes at the time of payment of salaries.
You must keep in mind that for FY 2019-20 there is no tax payable if your taxable income does not exceed Rs 5 lakh. Therefore, if no tax has been deducted by your employer till now, on the basis of investment declaration, then it is more important to submit tax-saving proofs so that excess TDS is not cut.
Once the actual proof is submitted, the accounts department will compute the taxes based on the proofs of the actual investments made by you. And for that you will have to furnish the documentary evidence of having actually made the investments as per the investment declaration made earlier.
You can make tax-saving investments different from those declared by you earlier but the deduction from taxable income will be given only on the basis of the actuals submitted and not on the basis of the proposed declaration made earlier.
The last date for such submissions varies, but most organisations would expect you to submit them by March 10, 2020. However, employers start asking for them in January itself as they would like to start deducting tax at source on the basis of tax calculations based on actual investments from January.
This will also enable the employee to finalise tax adjustments, if any, in the balance months of the current financial year (2019-20).If taxes have been deducted in excess or less, accordingly, they will get deducted in the last 3 months of the FY. Do not wait till March as then there wont be any scope for finalising and one could see a huge tax burden in that month and less of take-home pay.
The documents need not be attached or sent to Income-tax Department at the time of tax filing. Instead, it's the employer who has to receive them from employees and deduct tax accordingly.
At times it is found that after taking into account the tax saving investments/expenditures, the tax already deducted by one's employer is in excess and cannot be adjusted in subsequent months. In such cases the excess TDS will reflect in the Form 16 and the refund will have to be claimed by you from the I-T Department by filing the appropriate income tax return.
The important tax saving investment/expenditure proofs include
Investments - Under Section 80C
When it comes to investments such as Equity Linked Savings Schemes (ELSS) of mutual funds (MFs), life insurance, submit the ELSS fund statement, premium paid receipts respectively. For Public Provident Fund (PPF), if it is maintained with a bank or a post office, submit photocopies of the passbook showing all the transactions and the account details. In case you are maintaining PPF online, take a printout of the e-receipt showing transactions and the account details. In case of Sukanya Samriddhi Scheme and 5-year tax saving fixed deposit, the deposit receipt or a certificate from the bank has to be submitted to the employer.
Tuition fees
In case of tuition fees, submit photocopies of the school receipt carrying the schools' seal and signature of the receiver.
Tax-saving on affordable house
In the Budget announced in July 2019, an additional deduction on interest paid on affordable house was introduced. An individual can avail the deduction of up to Rs 1.5 lakh on the interest paid. This will translate to tax -savings on interest paid on housing loan for maximum up to Rs 3.5 lakh.
There are certain criteria one must satisfy in order to avail the tax-benefit which are as follows:
a) Loan must be sanctioned by a financial institution during FY 2019-20, i.e., between April 1, 2019 and March 31, 2020.
b) The stamp value duty of house should not exceed Rs 45 lakh
c) Individual should not own any other house property on the date of sanction of loan
d) An individual should not be eligible to claim deduction under section 80EE (mentioned below)
First-time home buyers
For loan sanctioned between 01.04.2016 to 31.03.2017, Section 80EE allowed tax benefits for first-time home buyers under which the benefit can be claimed on home loan interest. This deduction is over and above the Rs 2 lakh limit under Section 24 of the Income-tax Act. Hard copies of all the relevant documents have to be submitted. The deduction is allowed up to Rs 50,000 per year starting from FY 2016-17 and subsequent years until the loan is repaid.
House Rent Allowance Exemption
For those who claim HRA relief, the Permanent Account Number (PAN) of the landlord is mandatory. This condition is not applicable for those whose rent payment is less than or equal to Rs 1 lakh per annum, i.e., Rs 8,333 per month.
A copy of the lease rent agreement or declaration by the landlord in a prescribed format is to be submitted. Further, ownership proof of landlord of rented premises, which can be house tax receipt or the latest electricity bill or share certificate in case of co-operative society houses have to be submitted. The original rent receipts for the period April 2018 till date have to be provided.
Housing loan repayment (principal)
The certificate from a financial institution specifying the principal paid during April 2019 to March 2020 needs to be submitted. Ask the institution to mention the provisional amount for the last 2-3 months of the current financial year as equated monthly instalments (EMIs) would still be pending.
Loss from housing property - interest on housing loan - self occupied
The interest certificate from the bank or financial institution, specifying the break-up of interest and the principal amount for FY 2019-20 would be required. Possession/construction completion certificate are a must for availing the relief by some employers. Further, the date of loan taken and the date of possession are mandatory to avail the benefit.
Loss from housing property - interest on housing loan - let out on rent
If the house for which loan has been availed is let out, the same should be submitted with certificate from a financial institution specifying principal and interest paid during April 2019 to March 2020 (FY 2019-20).
New Pension Scheme (NPS)
There is no need to submit proof of actual Investments in case the investments in NPS is through Corporate Model or Employee Model as the same are recovered and deposited by company in your PRAN (Permanent Retirement Account Number) account. However, if you have opted for investment of Rs 50,000 under NPS on your own, i.e., outside salary, then submission of copies of PRAN card, NPS Transaction Statement for Tier 1 Account is necessary.
Mediclaim premium
Call up the insurer and ask him to send the statement for tax purpose under Section 80D. The premium should not be paid by cash and should be paid by cheque or digital transfer from the bank account.
Conclusion
It's better to get a confirmation on the actual requirement from your accounts department. Not all will be asking for all the above mentioned documents, while few others might have their own set of requirements. The documents, if not submitted within time, may make you end up with excess TDS which would have to be claimed as refund. Also, as a precaution, retain the original copies for personal income-tax assessment.
Since April of last year, the department would have been computing taxes on your salary based on the proposed investment declaration submitted by you earlier.
The taxes deducted at source (TDS) are covered under Section 192 of the Income-tax Act, 1961 making it the obligation of the employer to withhold taxes at the time of payment of salaries.
You must keep in mind that for FY 2019-20 there is no tax payable if your taxable income does not exceed Rs 5 lakh. Therefore, if no tax has been deducted by your employer till now, on the basis of investment declaration, then it is more important to submit tax-saving proofs so that excess TDS is not cut.
Once the actual proof is submitted, the accounts department will compute the taxes based on the proofs of the actual investments made by you. And for that you will have to furnish the documentary evidence of having actually made the investments as per the investment declaration made earlier.
You can make tax-saving investments different from those declared by you earlier but the deduction from taxable income will be given only on the basis of the actuals submitted and not on the basis of the proposed declaration made earlier.
The last date for such submissions varies, but most organisations would expect you to submit them by March 10, 2020. However, employers start asking for them in January itself as they would like to start deducting tax at source on the basis of tax calculations based on actual investments from January.
This will also enable the employee to finalise tax adjustments, if any, in the balance months of the current financial year (2019-20).If taxes have been deducted in excess or less, accordingly, they will get deducted in the last 3 months of the FY. Do not wait till March as then there wont be any scope for finalising and one could see a huge tax burden in that month and less of take-home pay.
The documents need not be attached or sent to Income-tax Department at the time of tax filing. Instead, it's the employer who has to receive them from employees and deduct tax accordingly.
At times it is found that after taking into account the tax saving investments/expenditures, the tax already deducted by one's employer is in excess and cannot be adjusted in subsequent months. In such cases the excess TDS will reflect in the Form 16 and the refund will have to be claimed by you from the I-T Department by filing the appropriate income tax return.
The important tax saving investment/expenditure proofs include
Investments - Under Section 80C
When it comes to investments such as Equity Linked Savings Schemes (ELSS) of mutual funds (MFs), life insurance, submit the ELSS fund statement, premium paid receipts respectively. For Public Provident Fund (PPF), if it is maintained with a bank or a post office, submit photocopies of the passbook showing all the transactions and the account details. In case you are maintaining PPF online, take a printout of the e-receipt showing transactions and the account details. In case of Sukanya Samriddhi Scheme and 5-year tax saving fixed deposit, the deposit receipt or a certificate from the bank has to be submitted to the employer.
Tuition fees
In case of tuition fees, submit photocopies of the school receipt carrying the schools' seal and signature of the receiver.
Tax-saving on affordable house
In the Budget announced in July 2019, an additional deduction on interest paid on affordable house was introduced. An individual can avail the deduction of up to Rs 1.5 lakh on the interest paid. This will translate to tax -savings on interest paid on housing loan for maximum up to Rs 3.5 lakh.
There are certain criteria one must satisfy in order to avail the tax-benefit which are as follows:
a) Loan must be sanctioned by a financial institution during FY 2019-20, i.e., between April 1, 2019 and March 31, 2020.
b) The stamp value duty of house should not exceed Rs 45 lakh
c) Individual should not own any other house property on the date of sanction of loan
d) An individual should not be eligible to claim deduction under section 80EE (mentioned below)
First-time home buyers
For loan sanctioned between 01.04.2016 to 31.03.2017, Section 80EE allowed tax benefits for first-time home buyers under which the benefit can be claimed on home loan interest. This deduction is over and above the Rs 2 lakh limit under Section 24 of the Income-tax Act. Hard copies of all the relevant documents have to be submitted. The deduction is allowed up to Rs 50,000 per year starting from FY 2016-17 and subsequent years until the loan is repaid.
House Rent Allowance Exemption
For those who claim HRA relief, the Permanent Account Number (PAN) of the landlord is mandatory. This condition is not applicable for those whose rent payment is less than or equal to Rs 1 lakh per annum, i.e., Rs 8,333 per month.
A copy of the lease rent agreement or declaration by the landlord in a prescribed format is to be submitted. Further, ownership proof of landlord of rented premises, which can be house tax receipt or the latest electricity bill or share certificate in case of co-operative society houses have to be submitted. The original rent receipts for the period April 2018 till date have to be provided.
Housing loan repayment (principal)
The certificate from a financial institution specifying the principal paid during April 2019 to March 2020 needs to be submitted. Ask the institution to mention the provisional amount for the last 2-3 months of the current financial year as equated monthly instalments (EMIs) would still be pending.
Loss from housing property - interest on housing loan - self occupied
The interest certificate from the bank or financial institution, specifying the break-up of interest and the principal amount for FY 2019-20 would be required. Possession/construction completion certificate are a must for availing the relief by some employers. Further, the date of loan taken and the date of possession are mandatory to avail the benefit.
Loss from housing property - interest on housing loan - let out on rent
If the house for which loan has been availed is let out, the same should be submitted with certificate from a financial institution specifying principal and interest paid during April 2019 to March 2020 (FY 2019-20).
New Pension Scheme (NPS)
There is no need to submit proof of actual Investments in case the investments in NPS is through Corporate Model or Employee Model as the same are recovered and deposited by company in your PRAN (Permanent Retirement Account Number) account. However, if you have opted for investment of Rs 50,000 under NPS on your own, i.e., outside salary, then submission of copies of PRAN card, NPS Transaction Statement for Tier 1 Account is necessary.
Mediclaim premium
Call up the insurer and ask him to send the statement for tax purpose under Section 80D. The premium should not be paid by cash and should be paid by cheque or digital transfer from the bank account.
Conclusion
It's better to get a confirmation on the actual requirement from your accounts department. Not all will be asking for all the above mentioned documents, while few others might have their own set of requirements. The documents, if not submitted within time, may make you end up with excess TDS which would have to be claimed as refund. Also, as a precaution, retain the original copies for personal income-tax assessment.