Close

	Receiver's Name:		*
	Receiver's Email:		*
	Your Name:		*
	Your Email:
	Your Message:

What you must know about submitting your tax proofs

January has almost ended - your HR and Payroll colleagues are probably sending you repeated reminders to share your tax related investment proofs with them. "Why?" you ask yourself. Here we tell you why its important to make a timely submission of these proofs and what you could stand to lose if you do not.

Watch the video

Why do you need to submit tax proofs?

Simply put, you need to submit proofs so that the right amount of tax is deducted from your paycheck - you should neither over pay taxes, nor should you under pay.

Employers are required to deduct tax from an employee's taxable income. This is tax deducted as source (TDS). In order to make the correct TDS calculation, the employer needs to account for all the deductions and exemptions available to an employee.

In the beginning of the year the employer takes a declaration from the employee stating the deductions and exemptions to which he or she is entitled. Some common examples of these are House Rent Allowance (HRA), Leave Travel Allowance (LTA), Section 80C deductions etc.

Based on this declaration, the employer calculates the employee's annual tax liability. This resulting calculation is used by the employer is to deduct taxes on a monthly basis from your monthly salary.

Towards the end of the tax year, to substantiate the claims made by the employees, the employers require documentary evidence for the expenditure incurred or investments done.

The tax liability is adjusted to account for any deviation in actual expenditure incurred or investments done as compared to the original declaration.

In case your tax saving investments are higher than what you initially declared, your tax liability would go down, which should result in a lower tax paid at year. However, if your tax saving investments are lower than what you initially declared, then your employer would have given you a tax benefit without you having made these investments. So, you will be liable for additional tax payments at year-end.

What are the different proofs that I need to submit?

The following are the broad eligible deductions and exemptions that you can claim, and accordingly the proofs that you need to submit.

• Rent Receipts: Required to claim HRA deduction (Click here to read about HRA and Taxes)
• Travel receipts: Required for LTA claims (Click here to read about LTA and Taxes)
• Home loan repayment certificates from Lender: Both principal and interest repayment (Click here to read about Home Loan related Tax Deductions)
• Section 80C deduction proofs: (Click here to read about 80C Tax Deductions)
• For other deductions like health insurance premium, education loan, donations etc. (Click here to read about Health Insurance and Education Loan related Tax Benefits)

Do I need to also disclose other incomes (and losses) that I have generated?

Yes, you should disclose other income you have generated. Along with the investment declaration to your employer, you can also disclose other incomes like interest, rental, capital gains on shares etc. The advantage of doing this is that your payroll can then deduct the right amount of tax these incomes. If this is not done, then you might be surprised to find a big tax liability on these sources of income at the time of filing your return. In certain situations you might even be liable to penal interest on overdue taxes.

As far as your losses are concerned, you don't need to disclose any loss to your employer, except loss on account of interest paid on home loan.

I changed jobs during the year, do I need to disclose my salary and tax deducted at the previous employer?

As discussed above, your employer is required to deduct tax, TDS, from your salary after taking into account your tax slab and the available tax deductions. If you have already used up your quota of deductions at the previous employer, but do not disclose this to your new employer, you will wrongly be getting these tax benefits twice. This could mean that you might face a large tax liability at the time of filing your return. In certain situations you might even be liable to penal interest on overdue taxes.

Comments

Thanks for your comment