- Date : 13/03/2020
- Read: 7 mins
Submitting investment proofs will help you avail tax deductions. Here’s a detailed look at which tax law sections you can claim tax deductions under and how to do it
Did you just receive a mail saying “The last reminder for income tax proof submission?” 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 collating documents for tax return.
What is investment proof submission form and why are you being asked to submit it?
Do you remember submitting a declaration at the beginning of the fiscal year estimating the number of investments you plan to make during the course of the year? Well, now is the time to submit investment proofs while filing returns and prove that you actually made those promised investments. If you don’t submit the investment proofs, your employer would deduct the higher tax from your remaining salaries.
What all can you claim?
Here is a look at some of the instruments widely used to claim tax deductions.
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:
- Notified government savings/deposit schemes or term deposits (greater than 5 years).
- Unit Linked Insurance Plans (ULIP), Equity Linked Insurance Plans
- ELSS, Mutual Funds (as prescribed under the Act)
- Life insurance premium
- Principal repayment of housing loans
- 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 and you need to submit proofs for Section 80C investments. In case you can’t submit the investment 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.
You can avail deduction on medical insurance premium u/s 80D of the Act with a varying limit of Rs 25,000 to Rs 1,00,000 claimable basis the dependents including spouse and parents and the age of all policyholders.
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 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 landlord's PAN and a rental agreement.
Even if an employer does not provide HRA, and employee can claim an exemption by filing a declaration through Form 10BA, making him/ her eligible for an exemption up to a maximum limit of Rs 24,000.
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.
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/ pay slips 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.
Do I need to submit any documents or proofs with my tax return?
With the complete digitisation of Income Tax filing, you don’t need to submit any proofs or supporting documents to the Income-tax Department. However you will need to furnish relevant documents to your employer to claim deductions.
Proofs for tax return: Income documents needed to claim deductions
|Tax Savings Investments||Exemption/Deduction to claim||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 Lakh. Revenue stamp to be affixed for 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. Self-declaration from the employee with details of the occupation.|
|Principal Repayment Of Housing Loan||Section 80C||Same as interest on housing loan mentioned above|
|Insurance Premium/ULIP/Pension Scheme||Section 80C||Premium receipts paid during current FY, in name of self, spouse, children|
|Public Provident Fund- PPF||Section 80C||Copy of the stamped deposit receipt, paid during current FY Or, Copy of the Passbook with clear mention as PPF Account|
|Interest accrued on N S C deposited in the earlier FYs||Section 80C||Copy of the NSC’s purchased in the previous FYs. Accured interest counts as other income too|
|Tax Saving Funds||Section 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||Section 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||Section 80C||Copy of Tuition Fees paid to educational institution. Payment in nature of Donations, Capitation fees, Uniform fee, Sports fee, Van Fees, etc., are not allowed|
|Post Office –Term Deposit with more than 5-year term||Section 80C||Copy of deposit receipt|
|Tax Saving Fixed Deposits with Scheduled Banks||Section 80C||Copy of Deposit Receipt invested during current FY, qualified benefit under Sec 80C|