The Income Tax Act provides many Sections under which tax benefits are available. Section 80C of the IT Act provides tax deduction of R1 lakh for specified investments and expenses made during the financial year. Additionally, exemptions are also available for the rent paid, LTA, savings bank interest, investments in Rajiv Gandhi Equity Saving Schemes, etc., under different Sections of the Act.
Taxpayers earning income from salaries should ideally plan their investments early as details are required to be provided to the employers. Employers take these investment declarations during the beginning of the year and deduct tax every month. Towards the end of the year, employers ask their employees to provide proofs of actual investments to finalise the employee tax liability.
Most employers have already sent a mandate to employees to provide their proof of investments and some are in the process of sending it. Hence, it’s important to keep the documents ready so that taxes are deducted correctly. As a thumb rule, while submitting investment proof, you need to ensure the following:
Investment proof being submitted are in your name. The documents can be in the name of spouse/children in specific cases as the Act provides. The documents, receipts, etc, pertain to the current financial year. In case of investments in PPF and bank deposits, ensure that besides the receipt, copy of the passbook page showing the deposit entry is also submitted if required by the employer. The documents have to self-attested if required by the employer.
If you are claiming exemption from House Rent Allowance, then you will be required to submit the rent receipts. Landlord’s PAN is also required to be mentioned in case the rent exceeds R2 lakh per annum. Your employer may also insist on a lease deed or bank details to ensure that the amount has been genuinely paid to claim the exemption.
From FY13, a new deduction is available under Section 80TTA of the IT Act where a deduction up to R10,000 can be claimed for the interest earned on savings bank account. While declaring your interest earned on savings bank account, you can