If you are a salaried taxpayer, you should know that TDS (tax deducted at source) is charged on your earnings for the year by your employer on behalf of the Income Tax Department and if you wish to save on it, you have to submit proof of tax saving investments before the deadline approaches. If you haven't made any investments yet, December is a good month to start, so that you can make tax deduction claims for the current financial year.
What is the deadline for submitting investment proof for income tax purposes?
There is no fixed deadline, nor does the Income Tax department decide the deadline to submit your investment proof. It is to be submitted to your employer and the deadline to submit is also decided by the employer. They are usually between January and the end of February. Note that the employer will not wait as late as 31 March and you have to be prompt in your submission.
If you are not aware of the tax exemptions that you can claim before your employer deducts taxes on your earnings, here is a list for you to refer.
1. House Rent Allowance: HRA is a deduction that employees living in rented accommodations can claim. You can calculate how much HRA can be claimed by you. You can also claim HRA if you are living with your parents who own the house, and you pay rent to them.
2. Entertainment Allowance: If you are a government employee, you can claim a deduction on the least of the following for entertainment allowance received:
a) Rs 5,000
b) one-fifth of the salary (excluding any allowance or benefits)
c) actual amount received as entertainment allowance
Employees of a private sector organisation do not have this benefit and entertainment allowance is completely taxable to them.
3. Children Education Allowance: Rs 100 per month per child for a maximum of two children is exempted. Also, Rs 300 can be claimed on hostel expenditure allowance per child up to a maximum of two children.
4. Professional Tax, PF and Standard Deduction: You need not submit any proof to the employer regarding these. They can be directly claimed at the time of filing your income tax returns. Note that starting the financial year 2018-19, you will get a standard deduction of up to Rs 40,000 on your taxable income.
However, if you have any kind of provident fund investments apart from EPF, like PPF or any unrecognised PF, you can submit a proof to claim an exemption.
5. Contributions towards to NPS: NPS is an efficient instrument to cut on tax payments and save for your retirement. If you are a government employee, you may have made compulsory contributions towards NPS. Exemption within the total limit of Rs 1.5 lakh under section 80C is allowed on NPS contribution. For any voluntary made by an individual, an additional Rs 50,000 under 80CCD is liable for tax exemption apart from the Rs 1.5 lakh under section 80C of the Income Tax Act. Submit proof of investment to your employer.
6. Other investments with deductions section 80C:
- Life insurance premium up to 10 percent of the sum assured for self, spouse and children.
- Contributions towards pension plans or any deferred annuity plans.
- Contribution towards ULIP.
- Repayment towards principal amount of a home loan for a house that the taxpayer has taken possession of within 3 years of taking the loan.
- Your PF contributions towards compulsory EPF also come under section 80C.
- PPF contributions for self, spouse or child.
- National Savings Certificate purchase.
- Investments in Equity Linked Savings Scheme (ELSS)
- Investments in a 5-year post office or scheduled bank deposit schemes
- Tuition fees of up to two children. This should not include any donations or development fees.
- Investment towards Sukanya Samriddhi Scheme Yojana for up to 2 female children.
- Health Insurance: You can claim deductions under section 80D for payments made towards any health or medical policy for yourself, spouse, children, and dependent parents. For yourself, spouse and children, a deduction is allowed up to Rs 25,000 per financial year, unless you and your spouse are senior citizens, in which case, you can claim deductions up to Rs 50,000. Premiums paid towards parent's policy gets an additional Rs 25,000 tax exemption, which can go up to Rs 50,000 if your parents are senior citizens.
7. Education loan: Amount paid towards payment of interest (not principal) on education loan for a full-time graduate or postgraduate course can be claimed for exemption under section 80E.
8. Donations: If you have made any donations to any charitable institutions including government disaster relief funds, you can claim 50 to 100 percent deduction under section 80G based on the kind of charity you contributed towards.