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Rules to check before making annual Tax / Investment Declaration to employer

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tax-declaration

In January, most employers ask their employees to submit the investment declaration along with the proof every year.  If you do not submit this declaration, the employer may deduct higher TDS amount.

What needs to be declared?

Employees should declare the tax saving investments and other deductions which they intend to claim in current financial year.

 

What will happen if the declaration & proofs are not submitted?

If you fail to submit the investment details & proof, the employer will not give you tax benefit for such investments and will deduct higher TDS Amount in coming month’s salary.
You will then need to claim the refund later from Income Tax dept by filing Income tax return.

 

Can I claim refund from Income Tax department later?

Yes, you can file Income Tax return and claim refund for excess Tax deducted.

 

I have listed some new & old tax deductions which you should consider while submitting your declarations:

1) HRA Claim for Rent Paid

You need to submit rent receipt to claim HRA deduction.

As per new IT Dept circular, you need to provide PAN of your landlord, if you are paying an annual rent of more than Rs 1 lakh.  If the landlord doesn’t have a PAN, a declaration to stating this along with the name and address of the landlord should be filed. See Details

 

2) LTA Claims for Travel

LTA can be claimed twice in block of 4 calender years (2010-2013 & 2014-2017).  LTA can be claimed for domestic travel through rail, air or any other public transport.
Some employers may not ask for proof and may disburse the LTA amount after taking a declaration that you have spent this money received from the company for the said purpose of travel.

 

3) Rs 2000 rebate under Section 87A

If your taxable income is less than Rs 5 lakh, you can claim tax rebate upto Rs 2000 under Section 87A of Income Tax Act.   See Details

 

4) Additional Housing Loan deduction of Rs 1 Lakh – under Section 80EE

If you are first time home buyer,  and value of house is Rs 40 Lakhor less,  with housing loan sanctioned for Rs 25 Lakh or less and loan sancationed in 2013-2014, then you can claim an additional deduction of Rs 1 Lakh under Section 80EE of Income Tax Act.

See Post on Housing Loan tax Benefits

 

5) Tax Saving Options under Section 80C (upto Rs 1 Lakh)

As most of you know, you can claim deduction upto Rs 1 Lakh under Section 80C by investing in various allowed instruments. For e.g. Employee PF, PPF, NSC, ELSS, Life Insurance, NPS etc
As EPF is already deducted by employer, you can reduce that amount from 1 Lakh and invest the rest in remaining instruments.

See deductions allowed u/s 80C

 

6) Other Tax Saving Options

Apart from 80C limit, you can also save tax on certain medical insurance & treatment, education loan, donations etc.  See details of other deductions

 

7) Interest on Housing Loan (for ready properties) – Sec 24B

Under Section 24B of Income Tax Act, You can claim home loan interest upto Rs 1.50 Lakh for self- occupied properties which are ready.

For under-construction properties, you can claim the interest once the possession of property is given. You can claim the pre-possession interest in 5 yearly instalments.

Feel free to share your feedback / quries using the comment box below.  PLease share when is the last date for Investment declaration in your company.

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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About wealth18

The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

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