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Income Tax Declaration and Investment Proofs

Updated on: 07 Aug, 2023 04:42 PM

It's almost the time to bid farewell to the financial year 2017-18 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 "Income Tax Declaration" to his employer. It's a conditional statement that contains the proposed investment and expense details that employee is likely to make over the financial year including investments and expenses which are income tax deductible.

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

Why do employers ask for Investment Declaration?

This is because it is mandatory to deduct a consistent amount of TDS from the employee's salary every month and to calculate 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 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 submissions of investment proofs is set as per 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 fresh income declaration.

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 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, annual rent paid is more than Rs 1 Lakh, 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. The current block is 2014-2017.
Medical Reimbursement Original Medical bills with Doctor's prescription(s) copies, if available.

At the time of filing income tax return, there might be a situation 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.

For any assistance, feel free to contact us!

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 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.