The HR Department recalculates the tax that needs to deducted from your salary in the Jan-Mar quarter. Salaried individuals typically receive an email to submit proofs at the beginning of the year.
Declaring the investments you have made, submitting documents such as rent receipts, medical bills helps the HR Department deduct tax accurately, not too much, not too little.
Documents to be submitted
- If you are getting HRA benefit as part of your salary, then you must submit rent receipts to your employer to claim tax benefit. Use the ClearTax rent receipt generator to get your rent receipts.
- Submit medical bills (issued after April 1, 2015) to claim the tax benefit for medical reimbursement of up to Rs.15,000.
- If you have taken a trip in India with your family, (again after April 1, 2015) submit all travel-related bills to your company to claim LTA exemption.
- Declare all the investments you have made under Section 80C to get tax benefit of up to Rs.1,50,000.
What happens if you miss the investment proofs deadline?
- You can directly claim HRA and Section 80C investments amount at the time of filing your tax return.
- Medical reimbursement and LTA, however, CANNOT be claimed unless bills are submitted before the investment proofs deadline. These exemptions can only be given by the employer. When no bills are submitted, both medical reimbursement amount of Rs.15,000 and LTA are added to your salary.
Not made any investments under Section 80C yet?
The good news is even if you are not able to submit proofs now, you can invest until March 31. You can show it in the income tax return at the time of the filing and get a refund.
What are the investments under 80C?
PPF, NSC, NPS, Tax saver FDs, ELSS, ULIP, Senior Citizens Savings Scheme, Sukanya Samridhi Account are some of the investment options under Section 80C. For a complete list of investment options, refer to this guide.
Here’s a quick way to exhaust the Rs.1,50,000 limit under Section 80C without making an investments. Add up all these expenses. What’s left after this is the amount you need to invest.
- Your share of PF Contribution: This is the amount which gets deducted from your salary as your contribution in Employee’s Provident Fund Scheme or Recognized Provident Fund. If you know your basic salary this amount is 12% of your basic.
- Children’s Tuition Fee Payment: Any tuition fees paid by you for the education of your children (maximum 2) is allowed under section 80C. This payment may have been made to any school, college, university or other educational institution situated within India for the purpose of full time education of your children. It includes payments for play school, pre-nursery and nursery.
- Principal Repayments on Loan for purchase of House Property: Payments made towards principal repayment of a loan taken for buying or constructing a residential house property is also allowed as a deduction subject to a maximum of Rs.1,50,000.
- Stamp duty & registration fees and other expenses: These expenses incurred for purpose of transfer of the property to the taxpayer can be claimed as a deduction. However, if you transfer the property before the end of 5 years from the year in which you took possession of the property, the deduction claimed will be added back to your income and you’ll have to pay tax on it.
- Life Insurance premium paid: Any premium paid by you for life insurance of yourself, your spouse or any child (child may be dependent/independent, minor/major, or married/unmarried) can be claimed as a deduction. The 80C deduction is valid on insurance policies purchased after 1st April, 2012 only if the premium is less than 10% of sum assured. The deduction can be claimed for the full amount paid (premium including service tax & other charges).
- Bills for preventive health check ups: This one falls under Section 80D. If you have not yet exhausted your deduction limit under section 80D and you have a bill for a preventive health check up, you can claim this bill and get a maximum of Rs 5,000 as a deduction. Do remember this is included within the overall limit of Rs 25,000 of Section 80D (Rs 30,000 in case of senior citizens).
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