It financial year end and the only thing that will bother you is your submission of the prrofs for income tax deductions and exemptions. If an employee fails to do so, the deductions and exemptions claimed can be denied by the employer. Hence, plan your taxes-submit the proofs to the employer and claim the benefit of tax exemption/deduction in your Form 16 and reduce your tax burden.
- House Rent Allowance (HRA) - You have to produce the rent recipt from the house owner to claim HRA exemption. In case the HRA received per month is Rs 3,000 or less, the employee need not produce any supporting documents for such rent payments. How ever the tax officer, at the time of assessment/enquiry, shall still have the right to call for the supporting documents. If the annual rent paid by the employee exceeds Rs 2,00,000, it is mandatory for the employee to report the PAN of the landlord to the employer in addition to the receipt.
- Leave Travel Allowance (LTA) - In general LTA can be exempted from tax twice in a block of four calendar years. This is as applicable for the government employees. The travel fares availed for the LTC is not taxable.
- Medical expenses - Reimbursement towards medical expenses incurred in connection with family members to the extent of Rs 15,000 is exempted from tax. Any additional reimbursement is taxable.
- Housing loan certificate - Repayment of principal amounts could provide a deduction within the total limit of Rs 1,00,000 along with other eligible investments under Section 80C. The interest upto 1,50,000 for self occupied and full interest for other wise is deductable from the taxable income. The exemptions can be claimed by submitting a provisional certificate for the housing loan from the banker as the proof to the employer.
- Premium for life insurance policy for self, spouse and any child shall be eligible for deduction. For policies issued after 1 April 2012, deduction shall be restricted to the premium amount not exceeding 10 per cent capital sum assured. Provide your employer with these details to substantiate that these limits are being maintained to ensure that the benefit is granted.
- Contribution to a PPF in the name of self, spouse and any child is eligible for deduction under Section 80C. The maximum contribution to this account during the financial year cannot exceed Rs 1,00,000. The annual accretion to the account is not taxable. A copy of the PPF passbook and payment receipt should be provided to the employer.
- Five-year bank fixed deposits (FDs): FDs with a scheduled bank with a lock in period of five years are eligible for deduction under section 80C. However, it needs to be kept in mind that the interest on these FDs is taxable and should be included in the return.
- Equity-linked savings schemes qualify for deduction under Section 80C. An account statement from the mutual fund house or an acknowledgment receipt for the investment need to be submitted to the employer to claim this deduction. Long-term capital gain and dividend on these funds and scheme are exempted from tax where securities transaction tax is paid.
- Tuition fees for full-time education of any two children to any university, college, school or other educational institution situated in India whether at the time of admission or thereafter is eligible for deduction. Deduction under Section 80C is available for such payments. Full-time education includes play-school, pre-nursery and nursery classes. The amount eligible for deduction shall include any payment of fee except the amount paid as development fee or donation or capitation fee. The receipt may be produced as the proof.
- Medical insurance premium: Premium paid in any mode other than cash for self, spouse and dependent children can be deducted up to Rs 15,000 per annum; an additional Rs 5,000 can be claimed if they are senior citizens. In addition to this, premium paid for parents' health cover can be claimed as deduction up to Rs 15,000, with an additional deduction of up to Rs 5,000 for senior citizens. Further, deduction can be claimed up to Rs 5,000 (paid in any mode including payment by cash) on account of preventive health checkup within the overall limit of Rs 15,000/20,000. Receipts of insurance premium/ health checkup expenditure need to be submitted to the employer to claim this deduction.
- Interest on education loan: Deduction can be claimed for interest paid on an education loan taken from an approved institution for higher education of self/spouse/ children/student for whom employee is a legal guardian. It is available for eight years starting from the financial year in which the individual starts paying interest.
- Donations to certain funds/charitable institutions: Section 80G provides for deduction on account of donations made to various funds, charitable organizations, etc. However, for tax withholding purpose, the employer considers only the donations made to the Prime Minister's National Relief Fund, the Chief Minister's Relief Fund or any other fund notified by the tax authorities in this regard. Other donations must be claimed separately on the tax return.
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