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Documents To Be Submitted To Employer To Claim Tax Benefits
The individuals having income from salary can claim tax benefits through allowances, exemptions and deductions. Having stating that, at the beginning of every financial year, employers seek an investment declaration from their salaried employees. This tax file declaration contains a list of all the tax-saving investments that an employee proposes to make during that relevant year.
Why Should You Submit Documents To Claim Tax Benefits?
The reason why you should submit documents to your employer for claiming the tax benefits is because the employer has to ascertain the tax liability of their employees. While calculating the tax liability, the employer will take into consideration these exemptions, allowances and deductions. And accordingly, your tax liability will be reduced. On the contrary, if you do not submit these documents, then you may have to pay higher taxes.
In addition to this, collecting these details at the beginning of the year makes it easier for the employer to deduct Tax at Source (TDS) every month. TDS is covered under Section 192 of the Income Tax Act, 1961, making it the obligation of employers to withhold taxes while paying salaries.
Documents To Submit To Claim Tax Benefits Through Allowances
The tax benefits through allowances which an employee can avail are house rent allowance, leave travel allowance, telephone reimbursement, books and periodicals. The employee can claim these allowances, only if they are part of part of his salary package. Keeping in view of these allowances, following documents are required to be submitted:
Salary component | Expense reimbursed | Document to be submitted |
| House Rent Allowance | Rent paid for residential accommodation | Rent receipts including PAN of employer (PAN is compulsory for rental payment above Rs 1 lakh annually) |
Leave Travel Allowance | Travelling cost to any place in India | Air tickets, train tickets, bus or taxi bills |
Telephone reimbursement | Landline bills including broadband and mobile phone | Landline/Mobile bill or broadband bill |
Books and periodicals | Cost of books and periodicals purchased | Bills or invoices for the books and periodicals |
Tax Benefits Through Deductions: Documents To Be Submitted
Deductions are the tax benefits which an employee can avail beyond his salary package. Some of these deductions are:
- Life Insurance Corporation premium
- Investments in Public Provident Fund, National Savings Certificate, Equity Linked Savings Scheme, Tax Saving Fixed Deposits
- Children’s tuition fees
- Housing loan repayments
- Medical insurance premiums
- Interest on loan for higher education
- Donations etc.
The employee can claim these deductions under Section 80C to Section 80U. In order to claim these deductions, following documents are to be submitted:
Investment or payment | Allowed as deduction | Documents to be submitted |
Section 80C | Maximum deduction = Rs. 1,50,000 | – |
a. LIC premium | Deduction under section 80C against aggregate income (gross total income) | Receipts of LIC premium paid |
b. Children’s tuition fee | Deduction under section 80C against aggregate income (gross total income) | Receipts of Tuition fee |
c. Housing loan repayments | Deduction under section 80C against aggregate income (gross total income) | Interest or EMI schedule from bank or financial institution |
d. PPF | Deduction under section 80C against aggregate income (gross total income) | PPF passbook or statement |
e. NSC | Deduction under section 80C against aggregate income (gross total income) | NSC photocopies |
f. Mutual fund ELSS | Deduction under section 80C against aggregate income (gross total income) | Mutual fund statement |
g. Tax saver fixed deposits | Deduction under section 80C against aggregate income (gross total income) | Fixed deposit receipts |
h. National Pension Scheme (NPS) | Deduction under section 80C and 80CCD(2) against aggregate income (gross total income) | NPS account statement |
i. Sukanya Samriddhi Yojana | Deduction under section 80C against aggregate income (gross total income) | SSY account statement |
j. Contribution to Employee Provident Fund (EPF) | Deduction under section 80C against aggregate income (gross total income) | No proof is required to be submitted. The employer makes a contribution on behalf of the employee. |
Interest on home loan | Taken under income from house property and reduced from aggregate salary | Interest or EMI schedule from bank or financial institution |
Medical insurance premium | Deduction under section 80D against aggregate income (gross total income) | Medical insurance premium receipt |
Interest on loan taken for higher studies | Deduction under Section 80E against aggregate income (gross total income) | Interest schedule from bank or financial institutions |
Donations | Deduction under section 80G against aggregate income (gross total income) | Donation receipts |
Disabled individual | Deduction under Section 80U of Rs. 75,000/1,25,000 | Copy of medical certificate |
Exemptions Tax Benefits: Documents Required:
Apart from the above allowances and deductions, the employee can also claim tax benefits through certain exemptions. However, in order to claim these exemptions, the employee does not have to submit any documents. The employer calculates these exemptions himself on retirement or resignation of the employee. These exemptions and calculation of such exemptions are as follows:
Income Component | Criteria for exemption | Exemption allowed
|
Gratuity | Allowed on retirement or resignation or death or disablement | Least of the following:
|
Pension | Commuted value of the pension allowed at the time of retirement |
|
Leave Encashment | Allowed at the time of retirement or resignation | Least of the following:
|
Consult a C.A
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