As the financial year comes to a close, taxpayers are supposed to submit proof of their investments, failing which employer is entitled to deduct a higher TDS in the last months of financial year.
If you have already made investment(s) in some of the tax-saving instruments such as insurance, PPF and NPS, among others, it is imperative that you submit the proof of your investment at the earliest so that your employer does not deduct more tax than required.
When the financial year commences, you are meant to declare the investments you plan to make so that the reduced TDS (tax deducted at source) is deducted during the year. And as the year comes to a close, you are supposed to submit proof of the same investments, failing which your employer will deduct higher TDS.
Consequently, you will get lower salary in your bank after higher TDS. And of course, you would not want to miss out on the tax benefits if you have made investments against them.
1. Lower cash in hand: Some employees rue their employers for transferring lower salary. This could be because of not submitting the documents they claimed the deduction for.
For instance, you claimed to invest ₹1.5 lakh in some tax-saving instruments. As a result, your employer deducted lower TDS. But when you didn’t submit the documents, the tax towards this income of ₹1.5 lakh was also deducted, thus reducing your cash in hand.
2. New vs old regime: With the new tax regime in place, most deductions are not permissible. So, in order to claim deductions, you must opt for the old tax regime. And if you opted for the new regime last year, you must opt for the ‘change to old regime’ this time. Else, it will be presumed that you are still filing your return as per the new regime.
3. Limit of ₹1.5 lakh is sacrosanct: You can make as much investment in tax-saving instruments as you want, but remember that deduction will be given only for ₹1.5 lakh in a financial year. And the limit of ₹1.5 lakh includes all investments put together such as in the PPF, NPS, ULIP, Sukanya Samridhi Yojana, tax-saving fixed deposits and ELSS, among others.
4. Submit requisite documents: It is imperative that you submit the requisite documents. For instance, to claim house rent allowance exemption, you must submit rent agreement and rent receipts. And when the rent is more than ₹one lakh per annum, you must submit landlord’s PAN number to the employer mandatorily.
5. Last date to submit documents: Although the last date for submitting the documents varies from employer to employer, you must submit as soon as you can to avoid taking a risk at a later stage.
Source: https://www.livemint.com/money/personal-finance/income-tax-to-save-your-salary-from-higher-tds-deduction-investors-must-submit-documents-soon-proof-of-investment-11704898255320.html
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