Yet again, the dreaded time for submitting tax-saving investment proofs is upon us. If you aren’t exactly an early bird and are used to submitting your tax-saving investment proofs only in the last minute, this article is for you. It may also happen that you may forget to show the entire amount qualifying for deductions to the employer. Don’t fret. It’s not as bad as you think.
Most salaried people tend to look at their tax-saving investments only during November or December. Why? Because it is during this time that their employer’s finance department sends out reminders asking for their investment details. These details are then used to determine the final tax deductions they need to make.
Now, here’s the thing. To understand what measures you can take on having missed the deadline, you need to comprehend how the tax-saving investment proof submission works.
There’s no need to shy away whenever you hear the words ‘tax’ and ‘investment’. We’re here to break it down for you. Sit back and read through the following points.
If you have missed the last date for submission, you’ll find that a certain sum has been deducted from your salary.
Section 192 of the Income-tax Act, 1961 covers TDS, making it mandatory for an employer to withhold taxes at the time of payment of salaries.
Depending on the proposed investment declaration you make earlier, the accounts department of the organization you work at computes taxes applicable to your salary. After submission of the actual proofs, the department computes the final taxes based on the investments you’ve made.
Things to remember: An individual is free to make tax-saving investments that are quite different from those he/she declared earlier. However, the deduction from your taxable income is only evaluated depending on the actual investment proofs you submit.
If you fail to furnish the actual proofs, your salary income will take a hit and be substantially lower than your usual pay.
Disclosing the partial amount
It may happen that a taxpayer may fail to show the employer the entire amount qualifying for deductions. This might be a result of investments made in equity-linked savings schemes (ELSS), especially via the systematic investment plans (SIPs).
In the event that you may have disclosed only the partial amount, the additional amount can still be reported in the income tax return (ITR) for claiming a tax benefit on it.
There is still hope
In the event that TDS is deducted from your salary for the month of March, keep calm and chill-out. You still stand a chance of getting a refund by disclosing your investments while filing your ITR. This can be done anytime between April 1, 2019, and July 31, 2019.
Keep in mind that deductions concerning house rent allowance (HRA) or other deductions falling under Section 80C such as Life Insurance premiums, children’s tuition fees, and the principal of Home Loan repayment can be claimed directly at the time of filing your ITR if you haven’t submitted the proofs for these already.
What can’t be recovered?
While it is important to know that you have the provision to submit your investment proofs while filing your ITR, it’s wise to refrain from misusing this opportunity.
Note that all deductions cannot be claimed at the time of ITR filing. Income tax exemptions associated with leave travel allowance (LTA) and medical reimbursements cannot be claimed while filing the ITR. It is mandatory to claim these through your employer.
Here are three tips to help you submit the necessary tax-saving investment proofs well before the due date.
- Preserve photocopies of your investment proofs per year: An ITR can be opened for assessment even up to seven financial years from the end of the year in which it is filed.
Let’s say that during 2015-2016, you’ve filed an ITR for FY 2014-2015. Therefore, the ITR can be open for scrutiny till March 31, 2022.
During the course of these years, it is quite possible that you will have only a vague memory of investments made years ago. This is when photocopies will come to the rescue.
- Declare your income earned from other sources: Even if your employer does not offer the option for declaring your income from other sources, you have to calculate and just declare the same. The investment proof is not required under this category.
In case an employee unknowingly ignores this section, he/she is likely to receive a notice from the Income Tax department for the non-declaration of income.
- Declare investments you’ll make even after the submission of your invest proofs: Let’s imagine that in your company, the last date for handing in your tax-saving invest proofs to your employer was January 31, 2019. There is a possibility that you might be making more investments in February or March. For instance, let’s assume that your rent for February and March is still due, along with an LIC premium that you have to pay in February. In that case, don’t forget to declare these future investments while submitting your investment proofs.
Here’s a fact that will come in handy while filing your investment proofs. If you stay in a rental property, make sure to keep the rent receipts issued by your landlord, safely.
If the annual rent amount exceeds Rs.1 lakh, you’ll need to provide your landlord’s Permanent Account Number (PAN). If he/she does not have one, you have to hand in a declaration to this effect made by him in writing.
Are you on the lookout for tax saving investments? We have plenty of them! Ready? Let’s go!