It's that time of the year again when the Accounts Department in your company begins cutting huge amounts of tax from the employee's salary. Why? Read on to find out…
Investment Declaration Form
At the start of the financial year, your employer would have handed you a form which you had to fill giving details of your proposed investments for the year ahead. As you were in the process of earning your income for the year, you had not yet saved enough to invest at that point of time. But you would have had a fair idea about the schemes you wanted to invest in, based on your unique short and long term financial needs.
If you did not fill in and hand over that form at that time, you always had a chance to do so in the subsequent months. Also, if the schemes you proposed to invest in stopped or if you decided to invest elsewhere, you had to update your employer with fresh details, so that they could deduct the right amount of tax from your gross salary.
Proof not submitted
Throughout the year, your Accounts Department would have deducted tax based on the information provided by you. Around January though, you need to submit documentary proof of having actually invested in the financial plans you declared earlier in the declaration form. How does this help? Well, in case you failed to invest due to any reason, they can deduct tax from your salary in three bearable instalments - from your January, February and March salary respectively. But if you did not provide adequate proof and they waited until March, quite likely you would end up with receiving a meagre or nil salary for the last month of the financial year i.e. March.
Better late than never
The Golden Rule is to declare investments early, spread your investments throughout the year and submit the relevant proof in January (or whenever your employer asks for - if they don't, then remind them!). This will ensure that you plug all gaps and get about the same take home pay every month, helping you budget your expenses and not miss any bills too!
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2 comments:
Hi
I'm Ajai Govind.G working for a software firm. The deadline given to me by my employer to submit actual proofs was March 5th. But as my investment involves yearly payment on 12 March I havent received my actual proofs yet. So what is the procedure now to save the tax? Can I submit my investment proofs directly to IT department and then intimate my employer of the same to avoid TDS? Or will the TDS be deducted and then I've to submit the proofs alongwith the IT returns filed before May 31st?
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