The close of the financial year also means it is time for your employer to collect investment proofs. The income tax act has made it mandatory for employers to allow only those deductions for which proofs are submitted.
Submitting proofs helps your employer make a final adjustment of TDS in February and March salary. This way the employer makes sure appropriate TDS is deducted on your annual salary.
Here’s a quick guide to help you with submission of proofs.
|Maximum amount allowed||Eligibility||Documents to be submitted||Whether deduction can be claimed directly in the tax return|
|Claim HRA exemption||Based on HRA calculation||You receive HRA
You pay rent
PAN of landlord if rent exceeds Rs 1,00,000 per annum
|Yes. If you have not been able to submit rent receipts to your employer timely, and you meet the eligibility criteria you can claim HRA directly in your tax return.
|claim interest deduction
on home loan
|Rs 2,00,000 for a self occupied property
Entire interest for a rented property
|You are an owner of a house property
You are a co-borrower in the home loan
You have paid interest
|Interest certificate from lender
Amount of principal repayment (allowed under section 80C)
Address of the property
|Yes. You can claim this deduction directly in your tax return.|
|Deductions under section 80C||Rs 1,50,000||You have paid life insurance premium
Deposited in PPF
Tuition Fees of Children
Sukanya Samridhi account investments
5 year Fixed Deposit
Principal repayment on home loan
|Life insurance receipt
PPF deposit slip or updated PPF passbook
Copy of NSC certificates
ELSS statement from fund house
Copy of FD or account statement
Certificate from lender
|All these deductions can be claimed directly in your tax return|
under section 80D
|Rs 25,000 for insurance of self, spouse, kids
Rs 30,000 for insurance of parents
(for uninsured parents medical expenses of Rs 30,000 can be claimed)
|Paid medical insurance premium
Paid for preventive Health Check-ups [Within these limits (Rs 25,000 and Rs 30,000) a deduction of maximum Rs 5,000 can be claimed for preventive health check-ups.]
|Premium payment receipt or letter from insurer
Bills of preventive health check-ups.
Actual medical expenses bills of up to Rs 30,000 in case of parent who are uninsured and more than 80 years old.
|This deduction can also be directly claimed in the tax return.|
|Donations under section 80G||100% deduction for amount paid
Or 50% deduction (as prescribed)
|Donating to prescribed funds and institutions as per section 80G||Donation receipt
Name of the Donee
PAN of the Donee
Address of the Donee
|This deduction can also be directly claimed in your tax return|
|LTA||Based on LTA as per CTC or salary letter||LTA is provided as part of salary
For trips within India (foreign travel is not eligible)
2 journeys can be claimed in a block of 4 years. (We are currently on the 1st Jan 2014- 31 Dec 2017 block).
|Tickets of travel||This deduction is allowed via your employer and cannot be claimed directly in your tax return|
|Medical reimbursement||Rs 15,000||Medical reimbursement is provided as part of salary.||Actual medical bills, doctor receipts, medicine bills.||This deduction can only be claimed via employer and is not allowed directly in your tax return.|
If you have worked with more than one employer in the financial year, your employer may also ask for details of your income from previous employment. You may also have to resubmit documents for deductions. This helps your current employer calculate tax on your aggregate income and apply proper tax slab & rate.
Do note for deductions that are allowed directly in your tax return, no documents are required to be submitted to the income tax department. However, these must be kept safely in your records should the assessing officer ask for them later.
All the best with your proof submissions!
This article by www.cleartax.in was also published on yahoo finance on 26th January 2016.