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Every salaried employee has to pay income tax when their annual earning is higher than the exemption threshold. To reduce the taxable income and consequent burden of tax, the Income Tax Act, 1961 has provisions for deductions under its various sections. To claim those deductions, the employee needs to make specific tax-saving investments, make a declaration of those to the employer and submit proof towards the end of the financial year to his employer. The employer then accordingly deducts TDS from employee’s salary. But what if he/she misses the income tax-proof deadline?
At the beginning of a financial year, the employer asks for a proposed investment declaration, based on which the estimated tax is deducted from salary as TDS every month. The final tax calculations depend on the investment proof submission towards the end of the year, usually during December-January.
So, if you miss the submission deadline, the entire set of proposed investments do not get considered , making your taxable income higher and in turn TDS gets deducted at a higher rate.
If you fail to provide investment proof to your employer, you can always submit it while filing the income tax returns and claim a refund. So, technically, you don’t lose your money.
Even if you haven’t invested throughout the year, there’s always scope to invest in tax-saving options within the financial year to claim refund. You can always buy an investment plan in India at the last minute to avail of the tax benefits.
As a salaried employee, the following are the proofs you can submit with your investment declaration to claim deductions:
If your earnings remain above the exemption threshold despite the PF and HRA settlements, it’s time to go for additional tax savings through investments. Alternatively, if you make less investment than the specified limit and end up paying higher taxes, you can always invest further in tax-saving options and claim a refund of such higher tax deducted.
Following are the most popular options when you are looking for tax-saving investments.
Choose your investments wisely. Reaping the tax benefits in full will ensure your take-home salary remains less affected.
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#Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions.
#Tax Laws are subject to change from time to time.
#Customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.