Are you wondering how to save tax this year? Are you confused about what you can give as investment proofs to your employer? Submitting investment proofs to your employer for tax saving can help you save money. Read this handy guide and we’ll tell you why investment proofs are important, what you can submit as proof and even what you can do if you don’t submit proofs to your employer.
Your investment declaration helps your employer
Your employer is supposed to deduct income tax for you every month and credit it to the government. If you submit your investment declaration, your employer can calculate your taxable income and deduct the appropriate TDS from your pay check.
What if you do not submit investment proofs?
If you declared certain investments but did not really invest, you will need to pay higher Income Tax. Your employer will have time, usually around 2-3 months, to adjust these deductions from your salary.
What does your employer need as investment proofs?
- If you want to claim LTA, you need to provide travel receipts, flight boarding passes or train tickets.
- You want to claim deductions under principal and interest repayment? Submit your Home Loan certificates.
- You can submit ELSS investment proof or any other investments under Section 80C of the Income Tax Act.
- Are you paying the premiums for your Life Insurance policy or a Health Insurance plan? Claim these as deductions too.
- You can claim HRA by submitting rent receipts.
For your employer to get a clearer picture of your taxable salary, you can disclose your savings bank interest, Fixed Deposit or Recurring Deposit interest earned during the year. You can also declare any capital gains on Mutual Funds or shares as other sources of income. This way, your income tax deduction will be more accurate.
Additional Reading: How to Save Tax With Insurance
What to do if you didn’t submit Income Tax proofs to your employer
You can claim the deductions later. Let’s say you made certain investments only after submitting the income tax proofs to your employer, you can claim a tax refund when filing your tax returns.
Additional Reading: What To Do When You Receive An Income Tax Notice
You don’t need to submit proofs while filing your tax return
When you file your Income Tax return, you do not need to submit the investment proofs at that time. You only need to declare the information about the investments.
Proposed Investment Proofs
Your employer tells you that you will need to provide proposed investment proofs. What do you need to do? This only means you need to give a declaration that you are going to make certain investments. Based on your declaration of proposed investments, your employer will deduct TDS.
If you need help planning your investments, we’ve got you covered.
Additional Reading: What Happens If You Don’t File Your Income Tax Return?