We have all seen how India has been rising at an exponential rate in the recent years. With such rapid economic growth, India has to keep track of all taxpayer investments to verify that they are paying their taxes correctly. In terms of tax deductions and reporting on investments made by individuals and companies, India follows the same laws as other countries. This post will explain how to appropriately declare your investments under India's Tax Slabs for Individuals and how to save money on taxes by simply declaring your assets in India. Before you can complete your investment declaration, you must ensure that all of the details are correct in order to avoid any future complications. Before you begin filing your taxes in India, you need receive clarification on specific portions of Form 12BB India. Let's take a closer look.
Introduction on Investment Declaration
If you work for a living, you should be aware that a portion of your pay is withheld for income tax and returned to the government. In order to calculate the TDS accurately, an employer will ask you to submit data of your tax-saving equipment and deductions. So, an investment declaration is a self-declaration form that you send to your employer at the start of the fiscal year, often known as tax season, to declare your expected tax burden. But don't worry if you forget the date; many companies send notifications to their employees regarding the filing of their investment declaration forms. Sharing the information with the employer from the beginning will assist the company in calculating the correct TDS. As a result, you will be entitled for the tax savings. The announcement, however, is not limited to investments. It can be extended to additional deductions such loss from a home owing to home loan interest repayment, housing loan repayment, tuition fees, first-time home buyers, and so on. Keep in mind that the last date to file for an investment declaration is before the corporation begins computing the TDS.
All About Form 12BB
The Form 12BB is a declaration of an employee's tax deduction claims. A salaried employee must submit investment declaration to his or her employer to collect tax benefits or rebates on investments and expenses beginning June 1, 2016. An investment declaration must be submitted at the conclusion of the fiscal year. All salaried taxpayers must file Form 12BB. At the end of the financial year, documentation of these investments and expenses must also be supplied.
The Different Scenario for Investment Declaration
It is required of all salaried taxpayers for the following tax-saving investments and expenses :
Allowance for Renting a Home (HRA)
- You can fill out the details needed to claim a tax deduction on HRA in the first section of investment declaration. To be eligible for HRA, you must supply information such as the landlord's name and address, as well as the actual rent paid.
- You must additionally supply the landlord's PAN if the rent paid throughout the year exceeds Rs. 1 lakh.
- Receipts for rent.
- If you are paying rent in cash, you must stamp the receipts with a revenue stamp.
LTC/LTA (Leave Travel Concessions or Allowance)
Leave travel concessions or leave travel allowances are granted as part of a salaried employee's wage package and are only valid for domestic travel. Salaried employees must also provide proof of travel-related expenses to their employers in order to claim a tax deduction on LTA/LTC. In Form 12BB, you should include the total amount of money you're claiming as well as the number of papers you're submitting.
Home Loan Interest Rates
In order to claim a tax deduction for interest paid on a house loan, you must fill out investment declaration with information such as the amount of interest paid or payable, the name of the lender, and the lender's PAN. Stamp duty, registration fees, and brokerage costs paid in connection with the transfer of the property can all be deducted.
Section 80C, 80CCC, 80CCD, and 80D deductions
Here's a quick rundown of Section 80 deductions that you can claim using Form 12BB.
- 80C: Life insurance premiums and/or ELSS funds, PPF, NPS, and/or school tuition expenditures for children, among other things.
- 80CCC: Annuity plan premiums
- 80CCD: Additional payments to NPS
- 80D: Medical insurance premiums
- 80E: Education loan interest should be paid
- 80G: Donations to certain charities are to be made.
- Interest revenue from a savings bank account (80TTA).
The Importance of Investment Declaration
Employees must offer a list of deductions and exemptions that they desire to claim. The employer will deduct TDS from the employee's pay based on these declarations. Most of the time, these investments must be made through the HR system of the employer. At the outset of each fiscal year, accounting departments request investment declarations from employees. If this statement is not provided, employers will be compelled to deduct TDS from each employee's nett income, leaving limited room for tax-saving deductions.
If you share your investment declaration with your company's accounts department at the start of the year, they'll be able to accurately calculate how much tax you owe, and you'll likely get a higher take-home pay each month. Because the tax deducted at source (TDS) is calculated depending on the investments you have made or plan to make, this is the case. Section 192 of the Income Tax Act, 1961, is a good place to start if you want to learn more about TDS and how it works. The investment statement you're talking about here is for the tax-saving investment options you'd like to make this year. Do remember to keep these points :
- After receiving the declaration, your employer will review the suggested tax savings deductions from your wage before computing the tax to be deducted at source. As a result, your predicted total remuneration for the year, as well as the estimated TDS, would be reduced.
- The tax saving starts with an annual cap of Rs. 1.5 lakhs can be found under Section 80C of the Income Tax Act.
- The disclosure will also cover Section 80D and Section 24 deductions.
- If your employer only wants the statement, you don't need to provide any additional documentation to show that you made tax-saving investments at the time.
- In addition, keep in mind that the declaration is not limited to investments and can be expanded to include other deductions such as a loss from a home owing to a home loan's interest payback.
- In the months of January or February of the given fiscal year, your company may need you to present supporting documentation or proof of investments.
Tax-Saving Investment Proofs
The following are some of the most important proofs for tax-saving investment :
- Mutual funds, Equity Linked Savings Schemes (ELSS), life insurance, Sukanya Samriddhi Scheme, and Public Provident Fund are examples of investments made under Section 80C. (PPF).
- Fees for tuition: Photocopies of school receipts with your child's institution's seal and the receiver's signature should be submitted.
- First-time home-buyers: Section 80EE offers tax benefits to first-time home-buyers whose loans were approved during the previous fiscal year.
- Repayment of a housing loan: A certificate detailing the principal paid over the course of the financial year must be supplied.
- Loss from self-occupied housing property in terms of interest on housing loan: The interest certificate must be received from the bank or financial institution, which indicates the principal amount and interest break-up.
- Loss from rented housing property in terms of interest on mortgage: The same investment declaration as above will be required.
- NPS (National Pension Scheme): If you invest in NPS through the Employee Model or the Corporate Model, you don't need to present proof of your investment. To qualify for a Tier 1 Account, you'll need to show copies of your PRAN Card and NPS Transaction Statement in situations where you have invested more than Rs. 50,000 on your own.
- Mediclaim premium: Request that your insurer send you a statement for Section 80D tax purposes.
The Deadline for Submitting Form 12Bb
Employers usually seek a declaration at the beginning of the fiscal year so that TDS computations for the entire year can be estimated. Investment declaration must be completed and submitted near the end of the fiscal year. If that is not completed the tax-saving for your investments will not work.
To receive tax benefits or rebates on investments and costs, a salaried employee must make an investment statement to his or her employer beginning June 1, 2016. In most cases, investment declaration must be submitted at the end of the fiscal year. The form is a declaration of an employee's tax deduction claims. However, this might differ from company to company. You might be unsure how to fill out investment declaration correctly. Viewing a completed Form 12BB sample is a simple way to achieve this. Now that you know how to fill out the investment declaration, you can simply get your paperwork in order and submit it on time. Take advantage of the situation and save as much money as possible.
*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
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