A taxpayer is entitled to make tax-saving investments till 31st March of a financial year to claim the benefits under the Old Income Tax Regime. However, the accounts department of your office won’t wait till March 31 to adjust your tax payable and cut higher tax as TDS (tax deducted at source) from your salary if you fail to invest and submit proofs till 31st December.
So, in case you fail to complete the tax-saving investments till December 31, 2022 – as declared in the beginning of the Financial Year (FY) 2022-23 – and don’t submit the proofs to the accounts department of your office by the year-end, as a general norm, they would no longer wait to adjust the salary against your planned investments.
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As a result, the figures of planned investments – which you had declared in the beginning of the financial year – would be added back to your taxable salary and the increased tax payable will be deducted from your salary of the next three months – that is the salary of January, February and March of the next calendar year, which are also the last three months of FY 2022-23.
While you will still have the chance of making the investments till March 31, 2023 and claim back the additional tax deducted due by your office as TDS due to the delay in making investments and submitting the proofs, you can’t have access to the money untill you file your Income Tax Return (ITR) and get the tax refund.
So, it’s better for you to make the investments by December 31, 2022 and enjoy a higher salary without additional TDS.
Although tax-saving investments may be used to meet your long-term goals if planned well and invested as per your financial planning, you may lose the opportunity as you have to do it in a hurry due to paucity of time, if you do not want to face a higher TDS for the next three months.
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Otherwise, you may take a little more time to maximise the gains from the opportunities of such investments, provided you don’t wait till March 31, 2023 – the end of FY 2022-23.