Salaried employees usually submit an investment declaration to their account department in the beginning of financial year. Following which, account department calculates and deducts tax from employees’ salary. In the month of Feb and March, accounts department flood the mails of their company employees with the mails asking for the proofs of tax saving investments done by them and other documents which can help in lowering the tax. But many a new employees, and sometimes even the experienced ones seems to be unaware about the types of proofs needed to be submitted to the tax department for getting tax exemption.
This article here aims at providing you with a list of types of proof needed to get the desired exemption. This list will also give you an idea of maximum exemption that you can get against your investments.
Proofs of rent payment
You can claim HRA (House Rent Allowance) exemption u/s 10 (13A) of the income tax act. You can claim this benefit only, if you live in any rental accommodation and actually pay rent for it. For this, you have to submit rent receipt to your employer. Its best to submit the rent receipts of all the 12 months. In case, it is not possible for you, you can alternatively submit the receipt of rent of the starting month and the last month. Revenue stamp must be affixed on rent receipt, if the rent is above Rs. 5000 and the payment is made in cash. Employer may also ask for a rent agreement between you and your landlord, so keep it with you always. You will also have provide PAN card of your Landlord if the annual rent exceeds Rs. 1 lakh.
Medical reimbursement of up to Rs. 15 thousand during one financial year is exempted, if you provide medical bills. You can submit the proofs of medical expenses like the doctor fees payment receipts and medicine bills (provided by your medical store). This exemption is allowed against Medical expenses incurred by the employee for medical treatment for self or any of his family members.
Home loan repayment certificate
Your home loan EMI consists of two separate payments – Principal and interest. Principal repayment is eligible for claiming deduction u/s 80 C of income tax act within the limit of Rs. 1.50 lakh prescribed u/s 80 CCE, and interest u/s 24 (b) of the income tax act. The limit for claiming deduction against interest payment is Rs. 2 lakh for self-occupied property. Full interest payment can be set-off against income, for a let-out property. Submit a copy of a provisional certificate for the relevant financial year provided by the bank/ Financial Institution stating separately the amount of principal and the interest paid.
Children School fees
School Fees (Only tuition fees) of children for full time school/ college is eligible for claiming deduction u/s 80 C of income tax act. Remember, the overall limit of claiming deduction under this section is only Rs. 1.50 lakh. Benefit is applicable for fees payment of the first two children only. For getting this benefit, fees payment receipts provided by the school or bank (if the school fees is directly deposited in the bank account) can be submitted to the employer.
An employee can claim tax benefits under section 80C of income tax act by investing in eligible schemes. The limit for claiming deduction from income u/s 80 C of income tax act is Rs. 1.50 lakh, which includes principal repayment of home loan and your PF contribution as well.
Following are the common eligible schemes for claiming deduction u/s 80 C of IT act. Here is the list of documents you can submit if you have invested in any of these schemes.
- PPF (Public Provident Fund): A copy of challan or the copy of the first page of passbook along with the page showing payment entry for the current financial year.
- NSC (National Saving Certificate): Copies of the NSC certificates for investment made during the current financial year.
- Life Insurance: A copy of Premium receipt or a consolidated premium payment certificate can be submitted.
- Sukanya Samriddhi Yojana: Challan copy duly acknowledged by the concerned Bank.
- ELSS (Equity linked saving scheme): Copy of the scheme account statement with logo of the fund house printed on it.
- Post Office Term Deposit for 5 year: Copy of the Deposit Receipt
- Bank Fixed Deposits (Tax Saving): Copy of the Fixed Deposit receipt (FDR).
Insurance Companies Pension Plan (u/s 80CCC):
Submit the premium receipt of the same. Deduction is available within the overall limit of Rs. 1.50 lakh along with deduction u/s 80C.
Proof of investment in RGESS
Rajiv Gandhi Equity Saving Scheme (RGESS) u/s 80CCG :
Statement of Demat Account confirming that eligible shares have been purchased or Mutual fund account statement, if the amount has been invested in mutual fund scheme qualifying under RGESS. The maximum limit of investment is Rs. 50000 and deduction is applicable only on the 50% of the eligible investment.
National Pension System u/s 80CCD (1B)
You can submit a copy of the account statement or deposit receipt. The limit of claiming deduction under this section is Rs. 50000 and it is over and above the limit of Rs. 1.50 lakh granted under section 80CCE of IT act.
Health Insurance Premium u/s 80D:
Submit a premium paid receipt of health Insurance policy. You can also submit a copy of the receipt of expenses towards preventive Health checkup of your spouse, children, parents or self.
For any premium paid for policy of self, spouse or children the deduction limit is Rs. 25000. Additional Rs. 25000 can be claimed against the premium paid for health insurance policy of your parents.
The limit is Rs. 30000 in case of senior citizen.
Limit for preventive health check-up is Rs. 5 thousand, but it is within the limit of Rs. 25 thousand under general category or Rs. 30 thousand for senior citizens, as the case may be.
Premium Payment in cash is not eligible for claiming deduction.
Donation receipt :
Submit the receipt of eligible donation. Donation in cash above Rs. 10,000 is not allowed for deduction. Donation receipt must contain the name of the trust/ society along with address and PAN.
Apart from the above, eligible employees will need to submit proof for claiming deduction under various other sections like 80DD ,80DDB, 80 U etc. which are not so common.
Apart from these documents, your employer may also ask from you about the income proofs of your previous employment, if you have changed employment in the current year. In that case, you will need to submit copy of Form 16 and the copy of Form 12B.