Every month your employer will deduct tax from salary and deposit it to the government account based on your IT declaration submitted to them. While calculating tax, your employer consider those declared investments and expenses that are specifically either tax exempted or on which deductions are allowed under IT Act.
At the beginning of the year or while joining the company you have to submit one IT declaration to your employer stating your investment and expenses that are income tax deductible. For these, you need to have supporting documents at the year end.
At the year end, you need to provide supporting document proofs that you have for those investments and expenses that you specified in IT declaration.
If you don’t do that then your employer will be forced to deduct complete tax at the year end without considering investments or expenses specified in IT declaration. In such cases you will end up paying higher tax.
Document Proofs that are accepted for IT deductions
- LIC – Premium paid receipts
- Health Insurance – Premium paid receipts
- PPF – Passbook copy as a payment proof will be considered
- Home Loan – statement from bank stating your interest and principal amount separately
- HRA – original rent receipt and rent agreement copy
- Mutual fund through SIP – latest statement
- EPF – Not required to submit any document as employer will be having details of it
- Tuition Fee – Fee receipts copy
- Medical Expenses – Medicine Bills with Doctor’s prescription copy
Also read: HRA claim – landlord denied providing PAN card
If in case you are not able to submit documents for your investment or expenses or not able to provide documents as due date of payment has not yet reached then such amount can be claimed at the time of filling income tax return. Refund in such cases can be claimed.
After getting all these documents, your employer will cross check to know whether that is matching with your IT declaration and eligible for IT deduction or not. If it is allowed then tax will be deducted as usual otherwise deduction will be at a higher rate without considering those investments.
At the end, our suggestion to you would be not to invest just to get IT deduction. Think, if that investment can give you good return in addition to IT benefit and then consider investing into it.
