Claim tax deduction even without proof of your investments
Instead of pleading with your company’s stubborn accounts department to accept your delayed proof of investments, you can claim the deduction when you file your tax returns.
Couldn’t gather proof of your investments on time again this year? Worry not. Thanks to last minute tax-saving investment decisions, a bulk of your February and March salary could be gulped down by taxes. But you need not fret as these overpaid taxes can be claimed back.
Yes, the non-submission of investment proof to your employer doesn’t nullify the tax benefit, except under a couple of exemptions. The Form 16 you receive from your employer would not carry the details of the investments if you failed to submit proof of them. Provided you have made the investments during the financial year, you can claim deductions on things which include Life Insurance premium, tax-saving mutual funds and fixed deposits, housing loan, investment into bonds, provident fund, children’s tuition fee payment, purchase of health insurance or undergoing medical check-ups.
These deductions available under sections 80C and 80D, and even donation-related deductions available under section 80G can be claimed while filing your tax returns. This means that you can make the investments even after your employer’s deadline for submitting investment-related proof . But investment decisions are best made at the start of the year, when panic doesn’t drive your investment choice. Also, you get returns on the investment throughout the year – as in case of the PPF – which can help you build a higher cumulative income.
However, there are certain exemptions that will have to be claimed through your employer. Take for instance the exemptions for leave travel allowance (LTA) and medical expense reimbursement. Employers need to preserve the bills and documents before granting a tax benefit on LTA and hence if you fail to submit this proof, you will have to bear the tax brunt. But LTA can be claimed twice in a four-year block – the present block is 2014-18. So you can either carry forward this benefit to the next year or claim exemption for fresh travel next year.
Medical expenses incurred on oneself and eligible family members is exempt upto Rs15,000, provided you can back them up with proof. If you fail to submit bills for reimbursement of medical treatment then your income would be taxable.
For all the other deductions you can claim a refund if excessive taxes have been paid. With the income tax department harnessing technology, the turnaround time for refunds has shrunk to an average of three months in most cases, according to the Central Board of Direct Taxes. Though there is no requirement to submit proof of investment at the time of filing your tax returns, you must preserve the proof of your investments for this year at least until September 2015.
Planning ahead for the next year would help you avoid the hassle of claiming income tax refunds. For the time you have remaining this financial year, you will have to budget your expenses in line with your tax-slashed income.