The time for submission of proofs for the tax saving investments made during the year has arrived for the salaried. For many people this will be a scramble to ensure that they come up with the required details in time. There is still no need to panic because one can still ensure that they are able to take a close look at their situation and then frame their strategy accordingly. There are several misconceptions that people have at this stage and it is vital that these are changed or removed. Here is a closer look at some things that individual tax payers need to pay attention to.
Many employees believe that the time limit for making the various tax saving investments is the one that is decided by their employers for the submission of the proof of investments. This is usually a couple of months before the end of the financial year and this is done by the employers for a reason. It enables them to cut the additional tax in case the employee has not completed the required investments during the year and this can be spread out across two to three months. This deadline imposed by the employer has no impact on the actual situation which is that the individual has to complete the various tax saving investments by the end of March. The end of the financial year is the time when this would need to be done and this is significant because the earlier deadline of the employer should not make the individual take hasty steps which do not have much thought behind them as it could lead to wrong decisions which can have long term consequences.
Claim it later
Another misconception among employees is that if the investment details are not provided at this point of time and the additional tax is deducted by the employer then there is nothing that they can do about it. This is not true because there is always the option for the individual to ensure that they file the correct or the updated details at the time of filing their income tax return. This will result in a situation where the investor would be eligible for a refund and this refund claim should be made at the time of the return filing. The worry for many people is that the figures in the Form 16 and their return will differ which is true but this can happen as there might be some details that are not reflected in the Form 16. Another thing that individuals should know is that in the new system of filing returns online there is no need to attach any proof with the return and one just needs to mention the details. However this does not mean that the individual should not keep the required proofs. This has to be kept in the records as the income tax department might call for additional information and the required proof can be submitted at this point of time.
Last year’s proofs
There are some investments that might be coming up in the last couple of months of the financial year and these might be arising at a specific point of time. Two examples of these could be insurance premium as well as instalments in an Equity Linked Savings Scheme (ELSS). The investor in this case can opt to give different details to their employer to ensure that they get the benefit of the deduction. In case of contractual payments like insurance premium last year’s premium receipt is usually accepted and the necessary figure included in the tax benefit. On the other hand the ELSS investment might be shown with an existing statement that shows a systematic monthly investment taking place and this will ensure that the amounts for the last months are taken into the workings. However these are meant only for the employer and while claiming the final benefit in the tax return the individual should have the current year’s proof.