Finology
Finology

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More


Are you eligible to any Income Tax Deductions this year?

You might be eligible to claim income tax deductions. All you have to do is to get it mentioned in your TDS statement. The Employer has the responsibility to deduct Income Tax from the salary of employees monthly on proportionate basis and deposit the same to government before the due date as prescribed by the Income Tax Department. The total tax liability calculated on the estimated projected income will be deducted proportionately in 12 months. As such, employer is required to assess the income tax liability of all employees from the beginning of the Financial Year.

Now, the employer will be able to assess the income tax liability of the employees only when the employees declare all their incomes (other than Salary Income) & income tax deductions. It is important to understand for the employees that unless they submit all their incomes and income tax deduction details, the employer will not be able to assess the TDS amount accurately. As a result the employees might end up paying excessive taxes in the form of TDS and at the end of the year while filing the return they will have to claim the refund for such excess TDS.

Let’s understand this with a simple example:

Priyal is working with a bank and she has provided following details about her tax deductible investments and payments in the declaration form to her employer. She had also taken a home loan for Rs. 25,00,000 for which she will be paying total amount of Rs. 1,30,000 towards interest and Rs. 90,000 towards principal repayment by the end of the current financial year.

We are comparing the scenarios where she has submitted the declaration form as against the situation where she forgot to disclose the home loan details. It reflects the difference in the total amount of Income Tax Deductions.

Details

Scenario

Without Disclosures

Scenario

with Disclosures

Difference
 1) Income from Salary 8,00,000 8,00,000 -
 2) Investments and Payments liable to Income Tax deductions
a. ELSS 25,000 25,000 -
b. PPF 15,000 15,000 -
c. Insurance Premium 17,500 17,500 -
d. Home Loan - 90,000 90,000
e. Home Loan Interest - - -
 3) Total taxable income (1-2) 7,42,000 5,22,000 2,20,000
 4) Tax liability as per slab rates 75,705 30,385 45,320
 5) Monthly TDS deducted by employer (4 / 12 months) 6309 2532 3777

As you can see, she ended up paying excess amount of Rs. 3777 in form of monthly TDS (Rs. 45,324 annually) than what she was required to and she will have to claim the same as refund while filing her return for that financial year.

This is why it is very important that you declare all the incomes and investments and payments liable to income tax deductions to your employers. They already have a prescribed format in which you have to provide the details along with the supporting documents so that they can calculate your tax liability accurately.

Here is a sample of declaration form for income tax purpose, for your reference.


 

Published by

Anand Satyapanthi
(Co-founder at Quicko.com, Chartered Accountant)
Category Income Tax   Report

2 Likes   41 Shares   10152 Views

Comments


Follow


Popular Articles




Follow taxation Exam20 Book Book Book caclubindia books


CCI Articles

submit article

Stay updated with latest Articles!




update