Tax deduction for salaried employees
FOR salaried employees it is possible to get tax deduction from the employer in respect of investments made or amount spent in terms of the provisions contained in Section 80C of the Income-tax Act, 1961.
The employee should inform his employer about the full details relating to investments made in terms of Section 80C of the Income-tax Act, 1961. The maximum deduction is, however, restricted to Rs. 1,00,000. Likewise, the employee can also get deduction from his employer in respect of payments made towards mediclaim policy in the name of self as well as in the name of other family members, including medical insurance premia for his spouse or dependent parents or dependent children.
The deduction as per Section 80D on account of medical insurance premium (mediclaim policy) is allowed deduction by the employer up to the maximum extent of Rs. 15,000 per annum.
However, where the premium is paid on account of health insurance on the health of the assessee or parents, if they are senior citizens, then the maximum permissible deduction would be Rs. 20,000 per annum.
The best part is that salaried employee can get the deduction from his employer in respect of investments etc., under Section 80C as well as for medical insurance payment under Section 80D of the Income-tax Act, 1961.
Within the overall limit of deduction under Section 80C amounting to Rs 1 lakh the deduction by the employer, apart from deduction for insurance, PF., etc., the deduction can also be granted on account of any sums paid by an assessee for the purpose of purchase or construction of a residential house property, where such payments are made towards or by way of any instalment or part payment of the amount due under any self-financing or other scheme of any Development Authority, Housing Board etc.
The deduction will also be allowed in respect of repayment of loans borrowed by an assessee from the Government, or any bank or Life Insurance Corporation, or National Housing Bank, or certain other categories of institutions engaged in the business of providing long term finance for construction or purchase of houses in India.
Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act.
It is worthwhile to note that the Central Board of Direct Taxes vide its Circular No. 8/2007 dated 5/12/2007 while discussing the matter relating to deductions to be granted to the employees by the employer has clearly mentioned that the Drawing and Disbursing officers should satisfy themselves about the actual deposits/subscriptions/ payments made by the employees, by calling for such particulars/information as they deem necessary before allowing the aforesaid deductions.
In case the DDO is not satisfied about the genuineness of the employees claim regarding any deposit/subscription/payment made by the employee, he should not allow the same, and the employee would be free to claim the deduction on such amount by filing his return of income and furnishing the necessary proof etc., therewith, to the satisfaction of the Assessing Officer.
As an employee it is your duty to provide to your employer full details of the investments made by you which would come within the purview of tax deduction under Section 80C of the Income Tax Act, 1961 so that necessary deduction by the employer can be granted from salary income. Similarly, do provide with the details of premiums paid under mediclaim policy so as to enjoy tax.
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