Filing an investment declaration is important to save your hard-earned salary from the additional deduction. Read on to find out how to fill out a declaration form!
At the start of every fiscal year, employers ask for an investment declaration from their employees. An investment or tax-filing declaration is mainly a list of every tax-saving investment that employees propose to make during that year.
Even if she or he does not carry out all of these declarations, the employer must be informed about them.
The main reason why employers ask for this investment declaration is to determine the tax liability of their salaried employees.
This is generally estimated based on the debits that are made through Section 80C of the Income Tax Act, medical bills, HRA Bills, and home loans. Gathering these details at the start of the year makes it less hectic for the employer to take TDS every month.
Tax deducted at source (TDS) which is covered under Section 192 of the Income Tax Act, of 1961, makes it the responsibility of employers to retain taxes while paying the employees their salaries.
Before leaving to fill out an investment declaration form, one must know what an investment declaration form I.
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What Is An Investment Declaration?
Hence, an investment declaration is a type of self-declaration form to calculate tax liability provided by you to your employer at the start of the fiscal year, which is also known as the tax season. But you do not need to worry if you don’t remember the date well, as several organizations ask their employees about their investment declaration form submission. Distributing all the information to the employer from the initial stage will be effective for the company to compute the accurate TDS. This will help you qualify for tax savings.
However, the declaration is not limited to investments only. This also applies to other deductions, such as those due to losses from the house property as a result of interest repayment on a home loan, housing loan repayment, first-time home buyers, tuition fees, and more. One needs to submit an investment declaration before the company begins to compute the TDS.
How To Fill Up An Investment Declaration Form?
You must fill out and file the tax declaration form before the TDS sum is deducted from your monthly salary by your employer. To aid in a tax deduction through Form 12BB, you need to follow these steps:
- To fill out an investment declaration form, the first thing you need to do is log in to your income tax account on the website (www.incometaxindiaefiling.gov.in).
- In the portal, you will find a tab named “Forms,” where you need to find Form 12BB and download it.
- After downloading the form, you need to fill in all the personal details, such as your name, home address, and details related to your PAN. You also need to mention the current fiscal year, for example, 2020–2021.
- If you are paying any amount as rent for your work, then it could be deducted under HRA. For this, you need to add details related to the house rent allowance.
- You must add details regarding LTA, if any.
- If you are contributing any interest on the EMI of the mortgage during this particular fiscal year, it can help you to benefit up to 2,00,000 for your property, and there would be no limit on your rented property.
- Fill up all the information related to deductible investments as well as deductions under 80D, 80DD, 80C, 80CCD (1B), 80G, 80E, etc.
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What Is the Purpose of Form 12BB
The tax benefits you have claimed are detailed on Form 12BB. According to income tax regulations, if you are a salaried employee, you need to submit this form to your employer to receive a tax refund. Form 12BB must be submitted at the end of the fiscal year.
How Can Employers Verify Supporting Documents?
- Step 1: Log in to your income tax account on the portal (www.incometaxindiaefiling.gov.in)
- Step 2: Under the ‘Forms’ tab, find and download Form 12BB. Start by entering your basic details, such as your employee code, name, and date of birth
- Step 3: Then, complete the sections for house rent allowance, LTA, and other deductions
- Step 4: Finally, sign the form and submit it to your employer. Be sure to keep a copy of the form for your records.
When Can An Investment Form Be Filed?
Home loan interest:
Your mortgage may be accruing a huge amount of interest every year. Except for declaring in Form 12BB the address, name, and PAN of the lender, you might be required to file a provisional interest certificate that clearly states the principal sum for the year as well as the breakup of the interest temporarily. This temporary interest certificate needs to be acquired from the financial institution or lending bank.
House rent allowance:
You can acquire the house rent that is payable to your landlord. The only information you will require is the house owner’s address, name, and PAN.
A travel allowance or concession:
You can ask for a travel allowance or concession only if it is incorporated into your monthly salary package.
Mediclaim premium:
According to Section 80D of the Income Tax Act, the insurance payment you contribute towards health insurance is eligible for tax benefits. The only thing you need to do is ensure that you declare a premium sum in your tax declaration.
Deductions under:
- Section 80C- amounts contributed for a life insurance investment or policy made in tax-saving mutual funds might be claimed as a tax deduction.
- Section 80CCD: It includes the sum contributed to the National Pension System.
- Section 80E: Interest that is paid on education loans.
- Section 80G: Donations that are made to specified organizations or governments, generally NGOs.
The sum declared by you at the start of the year in your investment declaration needs to meet the total sum invested at the end of the year.
If somehow you miss the deadline and forget to declare your investments, even by 2 to 3 days, your employer may overestimate your tax liability and take away the additional tax from your salary in the next month. Even if you end up paying an additional amount of tax, your ITR Filings can handle the matter. But, you need to ensure that you specify all the additional investments that you have made in your income tax return.
You also need to spend some valuable time on building an effective strategy that will assist you in making the investments needed without creating any obstacles in your cash flow. Investments that include monthly payments help to terminate additional financial burdens that you may face at the end of the year.
While filing an investment declaration form, a lot of problems can arise, such as:
- When the sum invested is the same as the sum declared by the employee: an employer estimates its employee’s taxable income based on the sum that the employee declared as an investment. If the sum declared at the beginning of the fiscal year is the same as the sum invested by the employee, then the employee probably will not be qualified to claim any tax refund.
- When the sum invested is quite more than the sum declared by the employee: There are some specific cases in which you might declare a specific sum as your investment at the start of the fiscal year but end up contributing more. If the extra investments become eligible for an additional tax deduction, in such a situation, you can save more tax.
Conclusion
A salaried employee needs to file a tax declaration form at the start of every fiscal year. The investment declaration form primarily involves a list of all the deductions or allowances that one might claim as a deduction or exemption from the salary based on a salary structure.
One needs to make sure that they file their returns on time and make suitable investments. Moreover, one needs to file an investment declaration to protect their hard-earned income from any additional deductions.
Even if you miss a single field in the form or make any errors your forms will not be filed on time. This is where you need expert guidance. Vakilsearch can help you with their experienced legal experts. So, you can easily count on us when it comes to your legal requirements.
Frequently Asked Questions
How to fill an investment declaration form?
To fill an investment declaration form, start by entering your personal details, such as your name, employee code, and contact information. Next, list your planned investments for the financial year, including sections like life insurance, PPF, and ELSS. Ensure you accurately enter the amounts you intend to invest. Review the form for any errors, sign it, and submit it to your employer.
How do you fill out proof of investment?
When filling out proof of investment, gather all relevant documents such as insurance premium receipts, PPF passbook entries, and ELSS statements. Clearly mark each document with your name and employee code. Arrange them according to the categories listed in your declaration form. Attach a summary sheet that lists all proofs and their corresponding amounts. Submit these documents to your employer for verification.
What is the investment declaration for TDS?
The investment declaration for TDS is a statement submitted by an employee to their employer, detailing their planned investments and expenses eligible for tax deductions. This helps in calculating the correct taxable income and the corresponding TDS to be deducted. It includes details of investments like life insurance, housing loan interest, and other eligible expenses under various sections of the Income Tax Act.
How to declare HRA in investment declaration?
To declare HRA in your investment declaration, include the rent you pay and the details of your landlord, such as name and address. You may need to provide your rent receipts or a rental agreement as proof. Ensure the amount declared matches your actual rent payments. Submit this information along with your other investment details to your employer.
What is the last date for an investment declaration?
The last date for submitting an investment declaration typically varies by employer, but it is usually set towards the end of the financial year, around January or February. It is crucial to check with your HR department for the specific deadline to ensure your tax benefits are accounted for in time.
How to write a TDS declaration?
To write a TDS declaration, start with your personal details, such as name, address, and PAN. List all your sources of income and the investments made under various sections for tax deductions. Clearly mention the amount invested in each category. Finally, sign the declaration and submit it to your employer or the relevant authority, ensuring all information is accurate and complete.
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