ITR filing: To claim deductions and reduce TDS, submit these investment proofs


As the end of the financial year approaches, many employers are reminding salaried employees to submit their investment and expenditure proofs to claim tax-saving benefits. This is an important step in reducing the Tax Deducted at Source (TDS) on salaries, which can significantly impact your take-home pay. If you’re unsure whether you need to submit these documents, here's a clear explanation of the process and its implications.

Who Needs to Submit Proofs?

Employees who have opted for the old tax regime must submit proof of eligible investments and expenses to claim various deductions and exemptions. These include claims for House Rent Allowance (HRA), investments under Section 80C, health insurance premiums, home loan interest, and other eligible expenses. However, if you have opted for the new tax regime, you do not need to submit these proofs, as the new regime offers lower tax rates but eliminates most deductions and exemptions.

Key Deductions Under the Old Tax Regime:

  1. HRA Exemption: If you receive House Rent Allowance as part of your salary, you can claim an exemption. To do so, you must submit rent receipts and agreements. For annual rent exceeding Rs 1 lakh, you’ll also need to provide your landlord’s PAN.

  2. Section 80C Deductions: Investments such as contributions to the Public Provident Fund (PPF), Employee’s Provident Fund (EPF), National Pension Scheme (NPS), or expenses like school fees and home loan repayments can help reduce your taxable income by up to Rs 1.5 lakh. You need to provide proof of these investments or expenses.

  3. Health Insurance (Section 80D): You can claim deductions up to Rs 1 lakh for premiums paid for yourself, your spouse, children, and parents. This also applies to premiums paid for senior citizen parents, where the deduction can be higher.

  4. Home Loan Interest (Section 24B): If you have taken a home loan, you can claim a deduction of up to Rs 2 lakh on the interest paid during the financial year. This applies to both self-occupied and rented properties, provided you have the necessary documents.

TDS on Salary: How It Works

Employers calculate the total tax liability based on your income and the investments or expenses you declare to them. If you fail to submit the necessary proof of your investments and expenditures, the employer will deduct tax based on the maximum possible tax liability, which could be higher than your actual tax dues. This means that you may pay more tax upfront, but you can still claim these deductions when you file your Income Tax Return (ITR). However, this may lead to a delay in your tax refund, and your filing might come under scrutiny.

It’s important to note that employees can choose to switch between the old and new tax regimes while filing their ITR. If you want to opt for the old tax regime, ensure you submit the required proofs to your employer and file your ITR on time (by July 31, 2025, for the FY 2024-25) to avoid penalties or complications.

The Importance of Submitting Proofs on Time

Submitting your tax-saving proofs on time not only helps reduce the TDS on your salary, but it also ensures smooth tax compliance throughout the year. While the new tax regime simplifies the filing process by offering lower rates but without deductions, the old tax regime remains advantageous for those who have made significant investments and incurred qualifying expenses.

To make the most of your hard-earned money, it’s crucial to submit your proofs as early as possible, check with your employer regarding the documents required, and ensure that you maintain all necessary documents for verification. This will help you stay on top of your tax obligations and potentially reduce your overall tax liability.


 

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