Forgot to submit tax-saving proofs to your employer? You can still claim the benefit for these
For many companies the last date that employees can submit their investment proofs, so that excess tax is not cut, is March 10. Those who miss this deadline will find that more tax is deducted at source (TDS) from their March salaries. However, if you are among those who have not yet provided your investment proofs, there is a way out.
Before we tell you how, here is why excess tax will get deducted from your March salary.
Why higher TDS will gets cut from your March
salary
TDS is covered under Section 192 of the Income-tax Act, 1961 which makes it the obligation of the employer to withhold taxes at the time of payment of salaries. Based on the proposed investment declaration you would have submitted in April of 2017, the accounts department of your company would have been computing taxes on your salary.
Once the actual proof is submitted, which is usually done by March 10, the accounts department will compute taxes based on the
proposed investment declaration you would have submitted in April of 2017, the accounts department of your company would have been computing taxes on your salary.
Once the actual proof is submitted, which is usually done by March 10, the accounts department will compute taxes based on the proofs of the actual investments made by you. For this, you will have to furnish the documentary evidence of having actually made the investments as per the investment declaration made earlier on in the year.
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 actual proof submitted and not on the basis of the proposed declaration.
If the employee doesn't furnish the actual proof, the salary income for March will bear the entire brunt and hence, it will be considerably lower than the usual amount.
At times a taxpayer may forget to show the entire amount of the qualifying amount for deductions to the employer. It can be for tuition fees or for investment in equity-linked savings schemes (ELSS), especially when it is done via the systematic investment route. The balance or the additional amount may still be disclosed in the income tax return (ITR) to claim tax benefit on it.
Now, even if TDS gets deducted, you can still get a refund by disclosing the investments, expenses and other deductions while filing your ITR anytime between April 1, 2018 and July 31, 2018, the last date for filling tax returns. "While deductions in respect of house rent allowance (HRA), or other deductions under Section 80C such as life insurance premium paid, children's tuition fees, principal component of housing loan repayment, investments in tax saving
fixed deposits, ELSS etc., can be claimed directly at the time of filing of return of income if you have failed to submit proof for these before the end of the financial year to your employer," informs Archit Gupta, Founder & CEO ClearTax.
Proofs to be submitted to the income tax department
The employer needs proof of investment before the benefit of such investments may be given to the employee. Similarly, the income tax department could require proofs, although, one is not mandated to send them such proofs. "It is important to note, that although the investment proofs are not to be submitted with the income tax authorities it is recommended to keep them safely for a period of at least six years," cautions Gupta.
Other than investments, you may have claimed benefit on HRA at the time of filing your ITR. "While no document needs to accompany your return of income, ensure that you have these with you for the purpose of record and future reference. Rent receipts issued by your landlord for rent you have paid during the year and if the rent has exceeded Rs 1 lakh, ensure you have obtained the landlord's PAN. In case he does not have a PAN, have a declaration to this effect made by him in writing," said Gupta.
What gets lost
Not all deductions can, however, be claimed at the time of filing the income tax return. Gupta says, "Income tax exemptions in respect of leave travel allowance (LTA) and medical reimbursements cannot be claimed while filing the return. These have to necessarily be claimed via your employer."
The LTA tax break can be claimed for travel of self and family members for journeys undertaken within India. It is available for 2 journeys in a block of 4 calendar years. The block applicable for the current period is calendar year 2018 to 2022. Any unclaimed amount can be carried forward to the next block. "Since LTA can be claimed via your employer, you can always request your employer to not deduct tax and permit you to claim it in the next year. If you have made no such requisition to your employer, the latter would deduct taxes accordingly, refund of which you may not be able to claim from the income tax department," says Gupta.
Even though the rules set by the Income-tax Department are crystal clear, the accounts department of several organisations may follow their own set of guidelines. Therefore, before availing of any such exemption, it's better to get clarity well in advance.
Further, medical reimbursements up to Rs 15,000 every financial year is exempt from tax provided one furnishes the bills or consultancy receipts to the employer. If one misses to furnish them to the employer, TDS will be cut by employer and you can't claim them while filing your tax returns. Interestingly, from the next financial year, the Finance Bill 2018 has removed the medical reimbursement and transport allowance (different from LTA) and instead provided a standard deduction on the salary income.
One can, therefore, not only take the benefit for investments not reported to employer but can also make any tax saving investments till March 31, 2018 ( provided the payment gets credited ) and claim the benefit while filing tax returns.