The March 31st deadline soon approaches. It’s just 2 weeks away. Time to submit your investment proofs to save yourself from paying excess tax. Why should you submit your investment proofs in time? You can claim tax benefits in a particular financial year, if you invest on or before 31st March of that financial year. Well if you don’t….You could find yourself in a lot of trouble.
If you don’t provide a declaration of your investments on time, your Company will deduct excess tax as TDS (Tax Deducted as Source) and pay taxes on your behalf. You could face a tough time claiming tax refunds. Submitting investment proofs to your employer before March 31st is an important responsibility.
Let’s take a look at 3 important things you need to know before submitting investment proofs to your employer. Want to know more on tax planning? Just leave a missed call on IndianMoney.com financial education helpline 02261816111 or just post a request on IndianMoney.com website. IndianMoney.com offers Free, Unbiased and on-call financial advice on Insurance, Mutual Funds, Real Estate, Loans, Bank Accounts and Capital markets.
You have to submit an “Income Tax Declaration” to your employer, at the time of joining the Company or at the beginning of each financial year. This is nothing but a provisional statement, where you give details of your proposed investments and expenses which are tax deductible. Your employer could ask you to give supporting documents (show proof of investments) in the month of January or February or latest by March 31st.
Depending on your proposed investments and expenses, your employer deducts TDS (Tax Deducted at Source) from your salary each month, which is deposited with the tax department. If you do not submit investment proofs by March 31st, your employer will deduct complete tax without considering your investments and expenses which are tax deductible. You will have to file income tax returns to reclaim the excess amounts.
You will have to show investment proof to claim HRA, LTA, Medical allowance, Interest on Home Loan and Deductions Under Chapter VIA - Section 80C, Section 80CCC, Section 80CCD, Section 80D up to Section 80U.
You can easily save tax by making use of tax deductions and exemptions. Identify which investments and expenses help you save tax. Track your expenses and investments such as telephone bills, travel tickets needed for LTA, Receipts of school fees paid for your children, life insurance and health insurance premiums, receipts of your ELSS investments, medical bills, PPF challan, receipts of any donations and any other investment proofs or receipts of expenses which enjoy tax deductions and exemptions.
What if you have changed two or more jobs in the current financial year? You have to report all the salary/income you have earned from your previous employers. This will help you avoid paying any additional taxes.
Can you escape taxes by not disclosing the salary you have earned from your previous jobs? Not a chance. The tax department knows how much income you have earned from your previous employers. It’s no point trying to hide this income. Disclose all this income to your current employer.
Do you earn rental income from house/property, interest income from fixed deposits or any other additional income? You must declare this income to your employer, who will deduct TDS and pay your taxes.You have to pay advance tax on your additional income in 4 quarterly installments, if your total tax liability exceeds INR 10,000 in a financial year.
Any quarterly shortfall results in you paying an interest of 1% a month, depending on the shortfall. If you declare your additional income to your employer, tax will be paid on your behalf. Timely tax payments by your employer means you don’t have to worry about advance tax.
So get your investment proofs ready before March 31st. It would be wise to start right now….Not much time left. Any efforts you put in, will result in less pain a few months from now. You won’t have to break your head chasing the tax refunds. Be Wise, Get Rich.
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