Documents to be submitted to employer to claim tax benefits

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.  

Also Read: Meaning, Types, Treatment of Dearness Allowance

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

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

Also Read: Can you claim HRA if you’re staying at your parents’ home?

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:
– Firstly, Life Insurance Corporation premium
– Secondly, investments in Public Provident Fund, National Savings Certificate, Equity Linked Savings Scheme, Tax Saving Fixed Deposits
– Thirdly, children’s tuition fees
– Fourthly, housing loan repayments
Fifthly, medical insurance premiums
– Sixthly, interest on loan for higher education
– Seventhly, 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
 

Also Read: 10 Best Ways to Save Taxes in 2022

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:
-Last salary (basic + dearness allowance)* number of years of employment* 15/26;
-Rs 20 lakh (which has been hiked from Rs 10 lakh as per the amendment);
-Gratuity actually received

Pension

Commuted value of the pension allowed at the time of retirement

– If the employee receives gratuity, then one-third of the amount of pension
-If only pension received, one-half of the pension

Leave encashment

Allowed at the time of retirement or resignation

Least of the following:
-Average salary drawn for the last 10 months;
-Salary per day* unutilised leave (considering maximum 30 days leave per year) for every year of completed service
-Leave encashment received
(i) Leave encashment received by Central or State government employee at the time of  retirement or resignation is fully exempt;
(ii) Leave encashment received by legal heirs of deceased employees is fully exempt

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