If you have made investments to save tax and claimed tax deductions on them, be sure to submit the proof of these investments to your office’s finance department soon. Most companies have set a deadline of January 15 for submitting proof of tax-saving investments. Here’s why it is essential to submit the proof and what will happen if you fail to do so.
What is a Tax-Saving Investment?
Under the old income tax regime, you can avail of multiple tax deductions by investing in various schemes under Section 80C. These schemes include PPF, ELSS, and life insurance policies, among others. You can also claim deductions for tuition fees for two children and premiums paid for health policies under Section 80D.
Why Is It Important to Submit Proof of Tax-Saving Investments?
Companies deduct TDS (Tax Deducted at Source) from employees’ salaries every month. At the start of each financial year, employees inform their companies about the tax-saving schemes they are investing in or plan to invest in. Based on this, the company deducts tax accordingly. In January, companies request employees to submit proof of these investments. This proof helps calculate the employee’s total tax liability for the financial year, and the company then adjusts the TDS deduction and submits the amount to the Income Tax Department before the financial year ends on March 31st.
What Happens If You Don’t Submit Tax-Saving Proof?
If you fail to submit proof of your tax-saving investments before the deadline (usually January 15 or the company’s specified date), the company will deduct more tax from your salary. The finance department adjusts TDS based on your reported investment plan. If no investments have been made or no proof is provided, the company will withhold additional tax. These extra deductions will occur in January, February, and March. To avoid this, make sure you submit the proof before the deadline to prevent higher deductions from your salary.