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TomorrowMakers ™

Tax Planning

Taylor & Francis Group

Time to submit investment proofs for tax? Here’s the guide

Confused how to submit investment proofs to avail tax deductions? Here’s a detailed look at which sections you can claim under and which instruments you can use to claim.
 

Did you just receive a mail saying “Last reminder to submit your income tax proof?” Is that why you are on the internet? Trying to fathom tax laws of the land? Don’t worry! We are here to take you through some common things you should keep in mind while submitting your investment proof.

Let’s start at the beginning.

Why are you being asked to submit these?

Do you remember submitting a declaration at the beginning of the fiscal year estimating the amount of investments you plan to make during the course of the year? Well, now is the time to prove that you actually made those promised investments. If you don’t do this, your employer would deduct the higher tax from your remaining salaries.

Related: Things you didn’t know about saving tax [Infographic]

What all can you claim?

Here is a look at some of the instruments widely used to claim tax deductions.

Section 80c

The most common deduction is u/s 80C of the Act which has a limit of Rs. 150,000 per fiscal year. To claim this, you can invest in any of the following:

  1. Notified government savings/deposit schemes or term deposits (greater than 5 years). 
  2. Unit Linked Insurance Plans (ULIP), Equity Linked Insurance Plans
  3. ELSS, Mutual Funds (as prescribed under the Act)
  4. Life insurance premium
  5. Principal repayment of housing loans
  6. Payment of tuition fees of up to 2 children

For detailed information about more options, refer to the table below.

The combined value of all investments u/s 80C cannot exceed Rs. 150,000. In case you can’t submit the proof to your employer, you can claim these deductions later when you file your income tax returns.

Did you know that Employees Provident Fund is also exempt from tax under Section 80C? If you are looking at investing only from the standpoint of saving tax, then remove the EPF amount from 1.5 lakh and invest the remaining amount.

Section 80D

You can avail deduction on medical insurance premium u/s 80D of the Act with a varying limit of Rs 25,000 to Rs 60,000.

This limit includes a maximum threshold deduction of an aggregate of Rs. 5000 spent on preventive health check-ups of the individual, his/her spouse and his/her children.

HRA

HRA is a part of a person’s salary and can be fully claimed as a deduction. In order to do so, you need to submit a copy of the rent receipts to the employer. In case the rent paid exceeds Rs 100,000 then it is mandatory to provide the landlords PAN and a rent agreement.

Section 24
Under this section, if you’ve availed loan for purchase or repair of your house, the interest on the home loan is allowed as a deduction. The total amount allowed towards this deduction for a self-occupied house is Rs 2,00,000. In case you’ve rented your house, the entire interest is allowed as deduction under section 24.

Related: How does insurance help you save tax?

Can you add other income to the mix?

The employee also has an option to submit details of his income apart from the salary thereby requesting the current employer to withhold taxes on the same. The employee can also submit a copy of his tax computation/payslips provided by the previous employer (in case dual employment in the same fiscal year). This saves the employee from the hassle of paying/calculating advance tax, however the employee must submit adequate supporting documents such as interest certificates (for interest) or rent agreement (for rental income) to substantiate the income offered.

Documents needed to claim deductions

Tax Savings Investments Exemption/Deduction to cliam Guidelines
Rent payments HRA

Monthly rental receipts. Following information is mandatory in the rent receipt:

Landlord’s name and address, signature of the landlord.

Landlord’s PAN or a self-declaration, in case the annual rent amount is greater than 1.0 lakh.

Revenue stamp to be affixed for the cash payments.

Interest on Housing Loan- Self Occupied Property Section 24

Interest certificate from the bank/financial institution with the total interest and principal paid/due for the FY.

Completion certificate of the house property from the builder or

Self-declaration from the employee with the details of occupation.

Principal Repayment of Housing Loan 80c Same as interest on housing loan mentioned above
Insurance Premium/ULIP/Pension scheme 80c Premium receipts paid during current financial year, in name of self, spouse, children
National Saving Certificate (NSC) 80c Copy of NSC certificate in the name of employee
Public Provident Fund- PPF 80c

Copy of the stamped deposit receipt, paid during current financial year

Or, Copy of the Passbook with clear mention as PPF Account

Interest accrued on N S C deposited in the earlier FYs 80c Copy of the NSC’s purchased in the previous FYs. Interest accrued will be considered as other income too
Tax Saving Funds 80c

Copy of investment certificate with the employee name, Investment Date, Amount, Type of Investment

Only the investments made under Tax Saving Fund / Plan will be considered

ELSS 80c

Copy of investment certificate with the employee name, Investment Date, Amount, Type of Investment

Only the investments made under Tax Saving Fund / Plan will be considered

Children Tuition Fees 80c

Copy of Tuition Fees paid to educational institution

Payment in nature of Donations, Capitation fees, Uniform fee, Sports fee, Van Fees, Shoes & Sock etc., are not allowed

Post Office –Term Deposit with more than 5-year term 80c Copy of deposit receipt
Tax Saving Fixed Deposits with Scheduled Banks 80c Copy of Deposit Receipt invested during current financial year, qualified benefit under Sec 80C of the Income Tax Act
80CCG – RAJIV GANDHI EQUITY SAVINGS SCHEME 80c

The investment is made in listed equity shares/Mutual funds

Deduction is limited to 50% of the amount invested in such equity shares subject to a maximum of Rs. 25,000

Have a particular question about tax planning? Leave it in the comments below!

 
 
 

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