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As the financial year is about to end, we again have to buckle up for the investments and savings to keep our future secure. But before you buckle up for this year, have you submitted proofs of the investment (investment proof) for the FY 2024-25?
This guide will help you learn about the various aspects of investment proof submission. Let's understand what documents you need to submit at the end of FY 2024-25 to your employer to get tax relief.
Employees must submit an investment declaration using the prescribed form upon joining an organization and at the beginning of each financial year, typically in February or March.
This declaration includes details of all investments made by the employee during the financial year. Employers use this information to calculate and deduct Tax Deducted at Source (TDS), which is then deposited with the Government within the specified due dates.
To maximize tax savings, employees should consider five key factors before submitting their investment proofs. Timely submission of accurate proofs is crucial to ensure maximum tax benefits.
Investment declaration proof must be submitted carefully to avoid any rejection of the claim by the employer.
Given below are the tax-saving investment declarations that you need to make for different tax-saving investments -
Employees can reduce their taxable income by submitting proof of investment. Employees can take advantage of tax rebates by submitting relevant proof for TDS deduction.
Employers must calculate an employee’s taxable salary accurately to deduct the correct amount of tax. This is a standard process, as employers are responsible for deducting tax from employees' salaries.
To facilitate accurate tax deductions, employees need to provide a clear and complete overview of their income, investments, and tax-saving efforts, supported by relevant documents. These tax-saving instruments typically include allowances and reimbursements such as HRA, LTA, medical reimbursements, and other entitlements provided by the employer.
It is essential to submit the necessary details and supporting documents to help the employer determine the appropriate taxable amount and ensure correct tax deduction.
If you have not submitted proof of your investment and your employer has deducted excess TDS, then you can claim a refund for the extra TDS deducted by filing your income tax return.
Employees opting for the old tax regime must submit proof of their tax-saving investments and expenditures to their employer to ensure accurate calculation of Tax Deducted at Source (TDS). Failure to provide these documents may result in the employer deducting the full tax amount from the employee's salary, particularly in the last three months of the financial year.
Employers typically request employees to submit investment proofs in the final quarter of the financial year to adjust TDS calculations accordingly. Timely submission of these documents is crucial to avoid higher tax deductions.
Form 16, issued by the employer as a TDS certificate, does not reflect deductions and exemptions available to the employee if the employer does not have your investment proofs. While individuals can claim the deductions and exemptions at the time of filing ITR, certain exemptions such as LTA can only be claimed through the employer. Therefore failing to provide investment proofs can lead to missing out of certai tax benefits.
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The due date for submitting investment proof for FY 2024-25 to your employer typically falls within the timeframe of late January to early March. However, the exact date can vary depending on your employer's internal policies.
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Submitting investment proofs involves providing documents that confirm yearly expenses such as house rent and planned financial investments. These documents, referred to as Proof of Investment (POI), enable employers to verify an employee's declared investments and calculate tax deductions accurately.
To submit an investment declaration, you must complete Form 12BB, a self-declaration form. This form is provided to your employer or accounts department to calculate Tax Deducted at Source (TDS) accurately. Submitting Form 12BB is essential for claiming tax benefits and is typically required at the start of the financial year.
Missing the deadline for submitting investment proofs may result in higher TDS deductions from your March salary. However, you can still claim tax benefits while filing your income tax return. By providing details of your tax-saving investments during the ITR process, you can request a refund for the excess TDS deducted and minimize any financial impact.
The new tax regime differs from the old/existing regime as it does not permit most deductions and exemptions. Taxpayers opting for the new regime's tax slab rates cannot claim deductions under Section 80C.
For a salary above ₹15 lakhs, opting for the old tax regime and maximizing all available deductions and exemptions is generally the preferred strategy for effective tax savings.
If employees fail to submit investment proofs on time, their TDS will be deducted in excess. However, they can claim a refund of the excess amount when filing their Income Tax Return (ITR) by submitting the required proofs during the filing process.
