As FY 2017-18 nears its end, your employer may have already started reminding you to submit proof of tax-saving investments and expenses. Although the accounts department may have computed taxes on your salary since April 2017, on the proposed investment declaration, it’s time to submit proof of actual investments as per the investment declaration.
Employers deduct tax from your salary and pay it to the Government known as Tax Deducted at Source (TDS). In case you do not submit proofs on time excess TDS will be cut, and it will only get refunded by the Income Tax Department once the tax cycle is over. To avoid this, make sure you submit proofs to claim tax deductions before your TDS is determined.
Proof of Investments Under Section 80C
Eligible investments under this section like ELSS, PPF, premiums paid on life insurance plans and some other investments, enjoy a tax deduction up to Rs 1.5 lakh a year.
To show proof of investment you need to submit statements, digital or physical photocopy as demanded by your company of the said financial product.
You need to make sure the proof shows that you have paid all outstanding premiums, installments for SIPs and more until March 2018. If you have invested in PPF at a bank or post office, you can submit photocopies or scan of your passbook that show account details and proof of transactions. For Sukanya Samriddhi Scheme or the five-year tax saver FD, submit the certificate from the bank or the deposit receipt.
Claiming HRA Exemption
You need to show a copy of the lease or rent agreement or a declaration by the landlord in the prescribed format to claim the House Rent Allowance (HRA) exemption. You have to submit proof that the landlord owns the rented premises and this may be the house tax receipt or the latest electricity bill. Only original rent receipts are accepted to claim HRA. If you pay a rent above Rs 1 Lakh a year, Permanent Account Number (PAN) of the landlord is compulsory.
Remember that you cannot claim rent for more than one house, and that premise must be located in the city of your work.
Exemption Home Loan Principal and Interest Repayment
For Home Loans, there are two sections. The first is for the principal paid which comes under Section 80C itself. You will have to submit a certificate from the bank, NBFC, or HFC showing the principal paid on the home loan from April 2017 to March 2018. The bank would have to mention the provisional amount for the last 2-3 months of the current financial year, as home loan EMIs may be pending.
For interest, if you do occupy the property, then under Section 24 of the income tax you can claim a maximum benefit of up to Rs. 2 lakh on the interest. For this make sure that your bank clearly gives an interest segregated balance sheet to compute how much interest you paid through the year.
First-time home buyers whose home loans were sanctioned in Financial Year 2016-17 can earn an additional interest deduction of Rs. 50,000 under Section 80EE, providing the house owner meets the other eligibility criterion.
Proof of Investments for NPS
If investments are made in the National Pension Scheme through Corporate Model or Employee model, there’s no need to submit proof of investment. But if you invest Rs. 50,000 in NPS on your own to claim the deduction under Section 80 CCD(1B), then you will have to submit the copies of your PRAN (Permanent Retirement Account Number) and the NPS Transaction Statement for the Tier 1 Account.
For Health Insurance Tax Benefits
The premiums paid on health insurance plans for you, spouse, kids, and parents enjoy a tax deduction up to Rs 25,000 a year under Section 80D. If your parents are senior citizens, the maximum allowable deduction is Rs 30,000 a year.
You have to ask the insurer for a statement showing health insurance premiums paid, to claim this benefit. Health Insurance premiums must be paid from your bank account via digital transfer or by cheque. Cash payments do not qualify for this deduction.
BankBazaar.com is a leading online marketplace in India that helps consumers compare and apply for credit card, personal loan, home loan, car loan, and insurance.
(The article above is written with inputs from Adhil Shetty, CEO, Bankbazaar.com. BankBazaar.com is a leading online marketplace in India that helps consumers compare and apply for credit card, personal loan, home loan, car loan, and insurance.)