Companies are asking their employees to provide proof of tax-saving investments. Most of the companies have set January 15 as the deadline for this. Employees have to provide proof of tax-savings during the financial year 2024-25. Why are companies asking for tax-savings proof? What will happen if proof is not given? What if this proof is given after the deadline? Let us know the answers to these questions.
What does tax-savings mean?
Income Tax (income tax) In the old regime, the benefit of deduction is available on many types of investments and certain types of expenses. Deductions available under Section 80C and Section 80D of the Income Tax Act are examples of this. Claiming deduction reduces taxpayers’ tax. There are more than a dozen investment options under Section 80C. These include PPF, ELSS, Life Insurance Policy etc. Apart from this, claiming deduction on tuition fees of two children is also allowed under this section. Under Section 80D, deduction is allowed on health policy premium.
Why are companies asking for tax-savings proof?
Every month the company deducts tax (TDS) from the employee’s salary. This deduction in tax is made as per the tax-savings plan given by the employee at the beginning of the financial year. The finance department of companies usually asks for tax-savings proof from employees by January 15. On the basis of this proof, he calculates the tax of the employee for the entire financial year. Even after tax-savings, if there is additional tax on the employee’s income, then tax is deducted from the salary for January, February and March. If an employee has not invested as per the tax-savings plan, he will be liable to pay higher taxes. Then the finance department deducts tax from the salary of January, February and March. The reason for this is that the new financial year starts after 31st March.
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What will happen if tax-savings proof is not submitted?
If you have made tax-savings for FY25, you should submit proof of the same to the finance department before the January 15 deadline. You can take HRA claim. For this you will have to provide proof of rent payment. You can provide proof of investment in life insurance policy, ELSS, PPF etc. under 80C. You can provide proof of premium payment of health policy under section 80D. If you do not provide this proof, then the finance department of the company will deduct more tax from the salary of January, February and March. Due to this, less salary money will come into your bank account.