We all understand the importance of paying taxes, but most of us tend to get nervous during the tax season, and understandably so. From paying our taxes to claiming deductions, tax benefits, and filing for returns, the starting of the financial year often gets the better of us.
However, every single penny counts. Hence one should be aware of the Indian tax system and how, when, and where they can claim deductions and enjoy all the tax benefits they can.
If you are a salaried person, you must know that a portion of your salary is deducted against Income Tax (Tax Deducted at Source, TDS) and remitted to the government. For this, an employer asks you to submit details of your tax-saving instruments and deductions to compute the TDS correctly.
So, investment declaration is a self-declaration form of estimated tax liability submitted by you to your employer at the start of the financial year, aka the tax season. But don’t worry if you don’t remember the date, as many organizations send communications to their employees regarding their investment declaration form submission. Sharing the details with the employer from the very start will help the company compute the correct TDS. This will make you eligible for tax savings.
However, the declaration is not just restricted to investments. It can be extended to other deductions such as loss from the home property due to interest repayment of home loan, housing loan repayment, tuition fees, first-time home buyers, and more.
The investment declaration last date is before the company starts computing the TDS.
Form 12BB, with effect from 1st June 2016, is a statement of claims by an employee for the purpose of a tax deduction, claiming tax benefits, or a rebate on investments and expenses, which has to be submitted by the end of the financial year.
In order to generate Form 12BB, an investment declaration has to be made for these investments and expenses:
If your house is financed through a home loan, you need to provide a home loan interest certificate as proof.
If you have received or are receiving LTC for 2018-2021, you can claim the tax exemption without having to travel. As proof, you have to submit bills, and vouchers for such expenses.
As an employee, you might be getting many benefits such as paid leaves, house rent allowance, and more. So, if your employer pays you HRA, you can submit proof of receipt and expense to save tax.
All you need to do is submit details of the rent paid, the name and address of your landlord to estimate the taxable portion of the house rent allowance to your employer and the rest is carried out by the accounts department.
If during the financial year you have earnings through other modes, such as interest from fixed deposits, dividends from the stocks you might hold, capital gains, or gifts, they must be declared to the employer.