How to claim deductions/exemption of income tax

Salaried persons need to submit tax related proofs to the employer for claim deduction on the saving made to save income tax. If fails to do so, employer will deny the deduction/exemption calimed and hence, you need to pay higher side of income tax or in other words, less amount of salary will be available in some last months of tax-year. So collect your income tax claim proof timely and avoid any hassle in the last days as it is the high time to do the groundwork.

A few of these exemptions/ deductions usually are discussed below.

House Rent Allowance (HRA) - Assisting documents for rent payments towards landlord are needed to be submitted to claim the tax exemption on HRA. However, if the HRA received per month is Rs 3, 000 or perhaps less, the employee do not need to produce any promoting documents for like rent payments. This relaxation is designed for the limited aim of tax withholding by the employer. The tax officer, at time of assessment/enquiry, shall still possess the right to call for the supporting docs. It is worthwhile to make note of that as per the most up-to-date circular, if the twelve-monthly rent paid by the employee exceeds Rs 3, 00, 000 yearly, it is mandatory with the employee to statement the PAN with the landlord to the employer. In case the landlord does not have a PAN, a declaration to this particular effect from the landlord together with his name and address need to be submitted. If the exemption is just not considered by the employer, an option to claim it from the tax return can be found.

Leave Travel Allowance (LTA) - LTA could be exempted from tax twice in the block of several calendar years. The present block of several years is 2010-13. The exemption is for travel expenditures incurred towards home and eligible close relatives based on a number of specified conditions. The exemption is just not available for overseas trips. If the employee will not avail of LTA, either one or on the two occasions during the block of several calendar years, one trip can become carried forward to be availed in the succeeding block. The most up-to-date circular issued by the tax authorities casts an obligation around the employer to maintain the supporting docs for LTA exemption. Therefore, employees have to submit your proof of visit the employer to avail with the tax exemption in the withholding stage.

Medical expenses : Reimbursement towards health care expenses incurred in association with family members towards extent of Rs 15, 000 is exempted from tax. Family members include things like parents, brothers and sisters or any kind of them wholly or mainly dependent on the individual. This is of family members will not cover parents-in-law. Contrary to other exemptions, it may not be feasible to state this relaxation from the tax return because the benefit is available only in respect of reimbursement by the employer.

Housing loan certificate - Employees could reflect the loss from property property on incurring interest expenditure with housing loan. Repayment of main amounts could offer a deduction within the total limit of Rs 1, 00, 000 along with other eligible investments beneath Section 80C. During the time of submitting the proof towards employer, only a provisional certificate with the housing loan may just be available. However, in case of prepayments or change from the EMI amount as soon as the submission of the provisional certificate, the total interest and main repayment amount, as indicated from the provisional certificate, will change. This will need an adjustment towards housing loan curiosity and principal repayment from the tax return, possibly contributing to additional tax payment/refunds. This should be considered by the employees while filing their taxation statements.

The deduction beneath Section 80C is fixed to Rs 1, 00, 000 and covers investments including contribution towards provident finance account, LIC policy and public provident finance. Some of these are listed below :

Premium for life insurance coverage for self, spouse and any child shall be eligible for deduction. For policies issued after 1 April 2012, deduction shall be restricted to the premium amount certainly not exceeding 10 % capital sum sure. Provide your employer with one of these details to substantiate why these limits are being maintained in order that the benefit is granted.

Contribution to your Public Provident Fund account from the name of home, spouse and any child is qualified to apply for deduction under Section 80C. The maximum contribution to this particular account during the financial year can not exceed Rs 1, 00, 000. The annual accretion towards account is certainly not taxable. A copy with the PPF passbook and payment receipt need to be provided to the employer. These days, online payments have also been enabled.

Five-year standard bank fixed deposits (FDs): FDs having a scheduled bank having a lock in amount of five years meet the requirements for deduction beneath section 80C. However, it needs to be taken into account that the curiosity on these FDs is taxable and may be in the return.

Equity-linked savings schemes get deduction under Section 80C. An account statement through the mutual fund property or an acknowledgment receipt with the investment should be submitted to the employer to state this deduction. Long-term cash gain and dividend with these funds and scheme are exempted from tax where sec transaction tax is paid. However, these funds and schemes possess a lock-in period of 36 months.

Employees may submit details of tuition fees with regard to full-time education involving any two kids to any college or university, college, school or different educational institution tucked within India whether during admission or then. Deduction under Section 80C can be found for such obligations. Full-time education consists of play-school, pre-nursery and nursery classes. Even more, the amount qualified to apply for deduction shall include things like any payment involving fee except just how much paid as growth fee or gift or capitation charge.

Medical insurance high quality: Premium paid in any mode other than cash for home, spouse and dependent children could be deducted up to Rs 15, 000 yearly; an additional Rs 5, 000 could be claimed if these are senior citizens. Additionally, premium paid with regard to parents' health cover could be claimed as deduction up to Rs 15, 000, with an additional deduction up to Rs 5, 000 for older folks. Further, deduction could be claimed up to Rs 5, 000 (paid in any mode including transaction by cash) due to preventive health checkup inside overall limit involving Rs 15, 000/20, 000. Receipts of insurance plan premium/ health checkup expenditure should be submitted to the employer to state this deduction.

Curiosity on education loan: Deduction can become claimed for interest paid while on an education loan removed from an approved institution for degree of self/spouse/ children/student with regard to whom employee is usually a legal guardian. It is readily available for eight years beginning from the financial year in which the individual starts having to pay interest.

Donations to certain funds/charitable corporations: Section 80G supplies deduction due to donations made to various funds, charity organizations, etc. However, for tax withholding objective, the employer thinks only the donations designed to the Prime Minister's Countrywide Relief Fund, the main Minister's Relief Fund or some other fund notified by the tax authorities with this regard. Other donations has to be claimed separately around the tax return.

The golden rule is to declare investments early on, spread your investments in the year and post the relevant proof to your employer on moment. In the function the timeline to submit the documents towards employer is skipped, the option of claiming the power in the tax return should be explored. However, the employer could have withheld the income taxes excessively and like excess taxes should be claimed as refund from the tax return. Just in case, you have certainly not missed the deadline set because of your employer, take a long time off to plan for your taxes - easier to be late than never.
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