Why Employees Should Declare Investments At the FY Beginning?

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    It is always wise to pay heed to the HR mail asking you to submit investment declarations at the onset of the FY as without it, your employer will deduct a significant amount of TDS which can be refunded only after filing ITR for the year.

    Why Employees Should Declare Investments At the FY Beginning?

    Here are some important points to note:

    1. When employers deduct TDS: Employer is liable to deduct TDS if the threshold limit of Rs. 2.5 lakh is reached in case of Indian resident employees aged less than 60 years.

    2. How TDS deduction is made on the salary after accounting for said expenses and investments in a year: TDS liability deduction for you goes down by the same amount as the investment and expenses shown by you, as the gross taxable income now decreases as say for eg. When your earnings amounted to Rs. 6,00,000 in a FY, the tax liability came in at Rs. 33,800 which your employer will deduct over a period of year. But when you show proofs under 80C upto Rs. 1,50,000, your gross total income decreases to Rs. 4.5 lakh and hence your tax out go

    3. Declaration of investments made by you at the beginning of the FY can differ from the actual investments: It is just what you plan you hand over to your employer so as to let them account for TDS calculation for the year ahead. And as a practice usually at the end of the FY, employer cross checks and goes by the proofs that you submit in respect of various investments and expenses for claiming tax deduction.

    Also make it a point to spread your investments through the financial year instead of waiting for the last month.

    Another important point to note is that do pay heed to make your investments in the same head as declared.

    Goodreturns.in

    Read more about: tds investment declarations
    Story first published: Tuesday, April 24, 2018, 13:31 [IST]
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