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Income Tax Declaration and Investment Proofs

Updated on: 20 May, 2024 06:42 PM

We have already bid farewell to the financial year 2023-24, and when employees are asked to submit the "Investment Proofs" to the statement called "Income Tax Declaration".

At the beginning of the year or at the time of joining the company, every employee is required to submit an "Income Tax Declaration" to his employer. It's a conditional statement that contains the proposed investment and expense details that the employee is likely to make over the financial year, including investments and expenses that are income tax deductible.

At the year's end, an employee is required to submit supporting "Investment Proofs" for the investments that had been stated in the "Income Tax declaration"

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This is because it is mandatory to deduct a consistent amount of TDS from the employee's salary every month, and to calculate the TDS amount, they want to know the estimated taxable income. The TDS amount is calculated on the basis of declared investments that are either tax-exempt or taxable under the Income Tax Act.

At the year's end, an employee is required to submit the Investment declaration and investment proofs to the employer, and upon failure to submit, the employer is forced to deduct complete tax without keeping in mind the proposed investments made.

The last date for the submission of investment proofs is set as per the organization's policies and will be intimated by the employer. If an employee joins the company in the middle of the year, then he should furnish his previous income details and make a fresh income declaration.

List of Investment Proofs Eligible for Tax Deduction

Below is the list of investment proofs that are eligible for tax exemption/ deduction:

Deduction under Deduction in relation to
Section 80 C Life insurance Premium slips( in the name of self/spouse/children), Passbook copy of PPF, Home loan Statement reflecting principal amount, Mutual Fund Statement, Kid's tuition fee receipts, NSC certificate, Tax saving FD receipt, Sunkanya Samriddhi Account passbook, etc.
Section 80 D Copy of Premium receipt, Health- Checkup receipts
Section 24 Home Loan statement, Self-Declaration, whether the house is self-occupied or let-out, submit completion certificate or occupancy certificate for claiming interest paid on housing loan.
HRA Monthly rent receipts & rental agreement. In case the annual rent paid is more than Rs 1 Lakh, the landlord's PAN should be quoted.
Section 80 G Receipts of donations
Section 80 E Copy of loan certificate reflecting the interest payments
Leave Travel Allowance Travel tickets. LTA can be claimed twice in a block of four years.
Medical Reimbursement Original medical bills with Doctor's prescription(s) copies, if available.

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What are the Consequences of not Making Investment Declarations?

As a result of not declaring proper investment proofs, you have to pay a higher income tax.

In case you were not honest about your investment, you still might have to pay higher income tax.

At the time of filing an income tax return, there might be a of refund or tax payable even after consistent TDS due to the difference between declared investments and actual investments made till the end of the relevant financial year.

Need Assistance while Filing your ITR and claiming your income tax refund? Book an eCA to get expert-assisted ITR filing.

Frequently Asked Questions

Q- Do we need to submit proofs while filing ITR?

Yes, you need to submit your investment documents by the specified deadline established by your company. Failure to do so may result in higher TDS deductions from your March salary. Nonetheless, if you have missed the deadline for submitting investment proofs, there are still options available to help minimize your tax liabilities.

Q- What should I declare in the investment declaration?

To qualify for a tax deduction on house loan interest payments, you need to complete an investment declaration form. This form requires details like the interest amount paid or due, the lender's name, and their PAN number.

Q- Who is eligible for investment proof?

Each year, salaried individuals are required to provide investment proofs to ensure accurate TDS (Tax Deducted at Source) deductions by their employers. In India, employers are mandated to deduct TDS annually, and without the proper investment proofs, there may be instances of over or under-deduction of taxes.

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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.