Every year, during the month of December or January, the salaried taxpayers need to submit their investment proofs to their employers for the current financial year. This is to enable the employers to deduct the income tax from the salary of an individual, liable to be paid at the end of the year. However, before you submit your investment proofs you should keep a few key points in mind:
At the start of every financial year, you are asked to provide investment declarations for the entire year. Based on your declarations, the employer deducts taxes on a monthly basis and deposits it with the government. However, to check for any discrepancies in the taxes, you need to submit investment proofs. In case of any mismatch, they can be adjusted in the next 2-3 months. For submission of investment proofs, you need to provide relevant documents to reduce your tax burden. If you cannot submit them, it might result in paying higher taxes.
You have to declare your investments by December/January. This is to distribute the amount accumulated as pending taxes. However, you may have some investments lined up for February/March. In this case, you can submit a declaration of the same to the employer so as to avoid paying unnecessary taxes.
It is always a good idea to share your additional income details with your employers. It can be due to the interests earned on your savings or fixed deposit account. You may also have some income from capital gains from mutual funds or shares, rental income from property, etc. Declaring these in time helps you avoid unnecessary hassle during the filing of income tax returns. Moreover, it also takes care of anything that might attract a penalty for not providing a true picture of your income sources.
It is always a good idea to make yourself aware of the personal expenses or investments with some tax relief. These may include phone bills, medical expenses, donations, travel tickets for LTA claim, etc. These can provide some relief upon furnishing of documents. However, most of us are not aware of these deductibles. They tend to overlook the bill submission that results in higher tax payment then what is necessary.
Submission of investment proofs is not mandatory. However, declaring your detailed investments is crucial. It is required by your employer for proper verification of your claims. If you made any investments and missed submitting the proofs, you can always claim it while filing returns. You don’t need the documents to declare the same when filing for returns. However, you should have the proof handy in case the IT department requests the same while processing your claim.
Keeping these simple points in mind would help you to take organized decisions better while planning your tax declarations and submission of proofs.