Generally speaking, the salaried employees like any other tax payer can make
investments for the purpose of section 80C or section 80D or any other section
of Income-tax Act by 31st of March 2014. Hence, they will be entitled to tax
deduction if they make the investment any time up to 31st March 2014. If the
employer issues a letter to the employees to give the proof of the investments
maximum by middle of February or else he will not allow the tax deduction
claim, this type of attitude I personally feel is not correct but also let me
clarify that under the Income-tax Law there is no legal duty cast on the
employer to receive the proof of the payments for the purposes of section 80C
etc. by 31st March. The individual employer depending upon his
work load which depends on the number of employees can issue guidelines which are applicable for his employees only. However, it is recommended that wherever the employer puts the condition of submitting the proof of investments etc. by a particular date, the salaried should try to adhere to the time limit so that they have no problem at all. By any chance if the employer does not grant deduction due to delay in sending the proof etc., in that situation also nothing much to worry the employer can claim the deduction at the time of filing the Income-tax Return as the employee in any case has submitted details to employer.
Hence, for the current Financial Year 2013-14 all salaried employees at least now immediately should give details to their employer about their plan of making investments as per different sections contained in the Income-tax Act, 1961. In particular, the salaried employees who have purchased this year new house property and who are eligible for higher tax deduction for interest on loan taken for residential house property should also give such details to the employer so that the employer can grant necessary deductions while deducting TDS on the salary income for the year ending 31st March 2014.
Likewise, in case the employee has asked the employer to deduct TDS in respect of bank interest and bank FDR interest, then also the employee should specifically mention the deduction available to him up to Rs. 10,000 as per new section 80TTA on account of interest on deposits in Savings Account of a bank. It may be noted here that deduction for bank Fixed Deposit interest is not eligible to tax deduction. Similarly, employees claiming deduction in respect of investments made in Equity Savings Scheme in terms of section 80CCG of the Income-tax Act, 1961 should also make available details to the employer so that all deductions can be claimed by the employee from his employer.
It may noted here that some of the above mentioned deductions if they are not claimed by the employee from their employer, then the only option left to claim this deduction is at the time of filing Income-tax Return. For example, let us say the employee has not given details of investment in Rajiv Gandhi Equity Savings Scheme to his employer. Similarly, the employee purchases new house this year and is eligible for Rs. 1 lakh extra deduction of interest on housing loan but he has not submitted the details to the employer. Now if these details are not submitted even by 31st March 2014, then the employer definitely will have no option but to ignore these deductions because such employer has not been provided with the details on this account. However, the employee now when he files the Income-tax Return, he will show in his Income-tax Return the income and the other details as appearing in Form No. 16 but while claiming tax deductions the employee will now claim one or more such deductions for which he was not able to submit details to the employer. Thus, by claiming tax deductions on the details not submitted to the employer, the net impact will be that some income tax will become refundable to the salaried employee consequent to claiming of deduction now by the employee through the Income-tax Return.
The best option, however, for the salaried employees is to immediately give a declaration to the employer of all the investments which they are going to make before 31st March so that the employer can consider these deductions and grant necessary tax deduction for the same. The practical problem lies with an employer having thousands of employees and such employer generally insists that the details of actual payment for investments for various deductions should be submitted to the employer latest by 15th February or 20th February. If these types of restrictions are put by the employer, then the employee should try to submit all such details of various investments etc. for which tax deduction is being claimed. In nutshell, the best planning for the salaried employees would be to so arrange their affairs in each year by 31st January that they make payments of all items for which tax deduction is permitted under the law so that tax deduction at source by the employer does not create any problem at a later date. However, as far as possible the employees should give the undertaking in the beginning of the year to the employer about the proposed investments etc. for a particular financial year.
work load which depends on the number of employees can issue guidelines which are applicable for his employees only. However, it is recommended that wherever the employer puts the condition of submitting the proof of investments etc. by a particular date, the salaried should try to adhere to the time limit so that they have no problem at all. By any chance if the employer does not grant deduction due to delay in sending the proof etc., in that situation also nothing much to worry the employer can claim the deduction at the time of filing the Income-tax Return as the employee in any case has submitted details to employer.
Hence, for the current Financial Year 2013-14 all salaried employees at least now immediately should give details to their employer about their plan of making investments as per different sections contained in the Income-tax Act, 1961. In particular, the salaried employees who have purchased this year new house property and who are eligible for higher tax deduction for interest on loan taken for residential house property should also give such details to the employer so that the employer can grant necessary deductions while deducting TDS on the salary income for the year ending 31st March 2014.
Likewise, in case the employee has asked the employer to deduct TDS in respect of bank interest and bank FDR interest, then also the employee should specifically mention the deduction available to him up to Rs. 10,000 as per new section 80TTA on account of interest on deposits in Savings Account of a bank. It may be noted here that deduction for bank Fixed Deposit interest is not eligible to tax deduction. Similarly, employees claiming deduction in respect of investments made in Equity Savings Scheme in terms of section 80CCG of the Income-tax Act, 1961 should also make available details to the employer so that all deductions can be claimed by the employee from his employer.
It may noted here that some of the above mentioned deductions if they are not claimed by the employee from their employer, then the only option left to claim this deduction is at the time of filing Income-tax Return. For example, let us say the employee has not given details of investment in Rajiv Gandhi Equity Savings Scheme to his employer. Similarly, the employee purchases new house this year and is eligible for Rs. 1 lakh extra deduction of interest on housing loan but he has not submitted the details to the employer. Now if these details are not submitted even by 31st March 2014, then the employer definitely will have no option but to ignore these deductions because such employer has not been provided with the details on this account. However, the employee now when he files the Income-tax Return, he will show in his Income-tax Return the income and the other details as appearing in Form No. 16 but while claiming tax deductions the employee will now claim one or more such deductions for which he was not able to submit details to the employer. Thus, by claiming tax deductions on the details not submitted to the employer, the net impact will be that some income tax will become refundable to the salaried employee consequent to claiming of deduction now by the employee through the Income-tax Return.
The best option, however, for the salaried employees is to immediately give a declaration to the employer of all the investments which they are going to make before 31st March so that the employer can consider these deductions and grant necessary tax deduction for the same. The practical problem lies with an employer having thousands of employees and such employer generally insists that the details of actual payment for investments for various deductions should be submitted to the employer latest by 15th February or 20th February. If these types of restrictions are put by the employer, then the employee should try to submit all such details of various investments etc. for which tax deduction is being claimed. In nutshell, the best planning for the salaried employees would be to so arrange their affairs in each year by 31st January that they make payments of all items for which tax deduction is permitted under the law so that tax deduction at source by the employer does not create any problem at a later date. However, as far as possible the employees should give the undertaking in the beginning of the year to the employer about the proposed investments etc. for a particular financial year.
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