Here's a list of documents you need to submit to avoid paying excess TDS
TDS has been regulated in India by Income Tax Act, 1961, through Central Board of Direct taxes under the Indian Revenue Services.
As we are inching closer to the end of financial year FY18, employer would have already started asking you to submit all the documents related to tax-saving and expenses.
Generally, an employer deducts tax from your salary and pay it to the government known as Tax Deducted at Source (TDS).
TDS is one form of tax which is deducted from an individual’s income on a periodical or occasional basis. This can be liable for income that are regular as well as irregular in nature.
TDS has been regulated in India by Income Tax Act, 1961, through Central Board of Direct taxes (CBDT) under the Indian Revenue Services (IRS).
Under TDS rule, the payee or employer must deduct a certain amount of tax before making full payment to the receiver. It is applicable for salary, commission, professional fees, interest, rent, etc.
The percentage of TDS depends on income tax slab rate for salaries. Just like each type of income has its own percentage of tax which is calculated when the amount meets certain limit.
Since TDS is collected at source without calculating investment that is eligible for tax deductions, it becomes very important for employee to submit and declare his investment proof to file a return or claim TDS refund.
In case, you fail to file TDS return in the scheduled time period, you will be liable to pay penalty of Rs 200 per day until the procedure is not completed.
If you exceed more than a year time limit for filing TDS return or provided incorrect details of PAN, TDS amount, you will have to pay fine ranging between Rs 10,000 to Rs 1 lakh.
Bank Bazaar report says, "If you do not submit proofs on time, excess TDS will be cut. It will get refunded by the Income Tax department only once the tax cycle is over. To avoid this, make sure you submit proofs to claim tax deductions before your TDS is determined."
Here's a list of proof that you need to remember for avoiding excess TDS, as per Bank Bazaar.
Proof of investment in Section 80C
Under Section 80C, if you have made investment in segments like ELSS, PPF, premiums paid on life insurance plans and some other investments, you are eligible to enjoy tax deduction up to Rs 1.5 lakh a year.
Documents like statements, digital or physical photocopy as demanded by your company of the said financial product, must be submitted by a taxpayer. You need to remember that the document information like outstanding premiums, instalments for SIPs and more should be submitted by March 2018.
If you have invested in PPF at a bank or post office, you should submit photocopies or scan of your passbook that show account details and proof of transactions.
To claim the House Rent Allowance (HRA) exemption, you should submit a proof of the lease or rent agreement or a declaration which is given by the landlord.
Proof must provide proper information - that the landlord owns the rented premises and this may be the house tax receipt or the latest electricity bill.
If a tax payer has rent above Rs 1 Lakh a year, the landlord's Permanent Account Number (PAN) would be compulsory.
Always remember to claim HRA exemption, it is always best to submit your original rent receipts or else the claim will be rejected.
Home Loan Principal and Interest Repayment
For availing home loan exemption, there are two sections available: firstly, the principal paid which comes under Section 80C itself and secondly, an additional interest deduction under Section 80EE.
You get a certificate from the bank, NBFC, or HFC showing the principal paid on the Home Loan from April 2017 to March 2018 is required. Also, the lender must mention the provisional amount for the last 2-3 months of the current financial year too, as home loan EMIs may be pending.
If you have not yet occupied the property, you can claim a maximum benefit of up to Rs 2 lakh on the interest under Section 24 of IT. Make sure, that your bank clearly gives an interest segregated balance sheet to compute how much interest you paid through the year.
An additional interest deduction of Rs 50,000 under Section 80EE is applicable for first-time home buyers. This is applicable for loans in FY 2016-17, provided the homeowner meets other eligibility criteria.
Investments for NPS
An investment made in the National Pension Scheme through Corporate Model or Employee model doesn’t require investment proof.
However, if you have invested Rs 50,000 in NPS on your own to claim the tax deduction under Section 80 CCD(1B), you will have to submit the copies of your PRAN (Permanent Retirement Account Number) and the NPS Transaction Statement for the Tier 1 Account.
Health Insurance Tax Benefits
Premiums paid on Health Insurance plans for you, spouse, kids, and parents enjoy a tax deduction up to Rs 25,000 a year under Section 80D.
If your parents are senior citizens, the maximum allowable tax deduction is Rs 30,000 a year.
To avail this benefit, you need to submit a statement showing health insurance premiums paid, to claim this benefit.