For a less taxing experience, keep tabs on processes

Jan 10 2014, 19:51 IST
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Indian laws cast an obligation on the employer to deduct tax on salary payments. Indian laws cast an obligation on the employer to deduct tax on salary payments.
SummaryIndian laws cast an obligation on the employer to deduct tax on salary payments. But how does your employer consider your investments and payments

Indian laws cast an obligation on the employer to deduct tax on salary payments. But how does your employer consider your investments and payments that are eligible for tax benefits? He will know based on what you communicate in the tax declaration at the beginning of the year, which needs to be substantiated now by way of actual proofs.

What if you don’t submit the actual proofs? In cases where you propose to make investments but don’t submit the actual proofs, there will be a tax shortfall and a catch-up from your salary. You have the option to file your income-tax return factoring in the deductions and exemptions, and wait for a refund from the I-T department.

Which documents need to be submitted? This is case-specific and depends on your exemptions, deductions and payments.

House rent allowance. You can claim exemption for the HRA granted by your employer to pay your accommodation’s rent. Copies of rent receipts need to be submitted. The landlord's PAN is needed if the annual rent exceeds R1 lakh. The employer can also ask for a copy of the rent agreement.

Leave travel assistance. If you get LTA from your employer, you can claim exemption for trips within India (with spouse, children, dependent parents and siblings) twice in a block of four calendar years. The current block, 2010 to 2013, expired this December. Also, note that a carry-over concession is available for one journey in the first calendar year of the next block. You need to submit the tickets and boarding passes, etc.

Loss from house property. If you incur a loss on your house property (including payment of interest on housing loan), it can be adjusted against your salary income.

Health insurance premium. Payment of health insurance premium up to Rs 15,000 for self, spouse, dependent children and parents (Rs 20,000 in case of senior citizens) is deductible. The payment receipts are required.

80C deductions. You can claim a deduction up to R1 lakh towards investments in and payment of life insurance premiums, PPF, NSCs (also interest), ULIPs, pension funds, investments in infra companies, re-payment of the principal amount on a home loan (including registration fees and stamp duty), scheduled banks FDs for 5 years or more and school/college tuitions fees of two children. The proof of each payment has to be submitted.

Income other than salary can also be declared. If you have another income, advance tax needs to be discharged thereon. If you cannot remember the deadline, declare the other income to the employer and avoid separate payment of advance taxes and interest (if you miss advance tax deadlines).

Changed your job during the year? Do not forget to communicate your salary and TDS details from the past employer. Or, your finance department may inadvertently calculate taxes, giving you the benefit of slabs. This may result in a tax liability.

Also, you may have to submit bills for medical expenses and telephone and internet usage, which are reimbursable by the employer. Non-submissions of such bills will result greater taxability. However, the deadline for submission may vary across employers.

Chaitali Bhatawdekar

The writer is senior tax professional, EY.

Views expressed are personal

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