Before you rush to save more taxes

Before you rush to save more taxes

Well, it is the month of Valentine. Though we have surpassed February 14, the fervour is still – as the cliché goes – in the air. If you eavesdrop on conversations, you would often hear a single lament from the enthusiastic partner. “Couldn’t you express your love with a gift, no matter how small!” The response would often be, “I don’t need gifts and proofs to prove my love.”

Well, the situation is the same when it comes to your investment declaration, albeit with a role reversal – your employer would be sending you incessant reminders to submit your investment declaration proofs for more than a fortnight and you would keep it off the boil.

Whether you believe it or not, investment declaration and proofs are as essential as gifts. Even though you have saved you need to declare and submit proofs to claim the benefits. How else do you expect your employer to know the taxes that need to be deducted upfront.

Just like your nagging wife, who would go on a spending spree citing “You never gifted me anything for Valentine, the employer too would go on a deduction spree and cut more than required. He would disregard the Rs. 25,000 you paid for health insurance, the Rs. 2 lakhs you paid as rent, tuition fee of Rs. 60,000 you bear each year unless you remind them again in writing along with the essential proofs.

I am sure you are drawing similarities to the red rose you gifted your love one Sunday and the necklace you bought two months ago. Your employer is stricter than your lover and won’t just go by words, but bills as evidence.

Here are the proofs that you would need to gather.

So, to claim HRA you would need copies of rent agreement and receipts of rent payment from the landlord and his/her PAN number. For home loan, you would require the interest certificate from financier and completion certificate from the builder. If you have let out your house, then you would have to also provide the details of rent received, and property taxes actually paid.

For other investments such as insurance, NSC, PPF, bank and postal fixed deposits, NPS and tax-saving mutual funds you would need the copy of the premium receipt, investment certificate or the passbook in your / spouse / dependants name and investment date. For expenses such as tuition fee and education loan repayments, you would have to provide receipts and certificate of interest actually paid, if any.

For the recently announced Rajiv Gandhi Equity Savings Scheme the proofs are multiple and stringent – Copy for Form A, Income below Rs. 12 lakhs proof, a self-declaration form saying you are a first-time equity investor.

There are other mandatory forms that need to be submitted to claim select tax exemptions:

  • Medical treatment of handicapped dependent (Section 80 DD) – Form 10-IA
  • Self-permanent disability (Section 80 U) – Form 10-IA
  • Medical Treatment Expenses for the specified disease – Deduction U/S 80DDB – Form 10-I and proof of actual expenses paid

We’re on a vacation, ill or just too busy to invest and submit proofs? Don’t fret as the Income Tax Department sticks to the promises unlike your “date”. The tax deductions offered under various Sections of The Income Tax Act can still be claimed, provided you invest before the D-day of March 31, 2016, barring certain exceptions.

However, these won’t reflect in your Form 16 and hence, the amount to be mentioned in return forms would differ from your Form 16. As your employer has cut more taxes that you are ought to pay, you would have to claim a refund.

Though you need not attach the proofs to the income tax return, you need to preserve these. Don’t just tear them apart once you have filed the returns and received your refunds. You need to preserve the proofs until the period during which your returns can be called for scrutiny. The rule book says a return can be picked up for scrutiny till 6 months after the end of the financial year in which the returns were filed. To make it simple, if you have file your return in July 2016, then you need to preserve the bills till September 30, 2017 (six months from the end of 2016-17 or March 31, 2016).

You may lose an opportunity to earn some extra interest on the extra taxes that were deducted if you miss out on submitting these proofs on time. So, you should always start planning for your tax-saving investments at the start of the year to avoid scrambling for funds later.

So go on. Celebrate love. Go on a date with your finances and submit accurate investment declaration form timely.