Investment Proof Declarations.

If you’re a working professional, right around this time of the year, your HR will ask you to submit investment documents to assess tax on your income – a.k.a “Investment Proof Declarations”.

Here’s a quick 101 to ensure you don’t shell out excessively on income taxes🚨

1. At the beginning of each financial year, your HR will ask you to fill out a tax declaration form. This determines your TDS (Tax Deducted at Source).

And if you’ve meticulously planned your investments – you could reduce your taxable income & claim several tax deductions.

2. So, what can you declare to save taxes on your income?

- Investments under Section 80C: You can claim upto ₹1.5L in deductions against investments like Equity-linked saving schemes (ELSS), life insurance premiums, employee’s provident fund, and more.

- Section 80D: Here, you can save upto ₹75,000 on you & your family’s health insurance premiums based on the individuals covered under the policy.

- Section 80CCD: You could claim an additional deduction of up to ₹50,000 if you invest in the National Pension Scheme.

And of course, there are several other options – and which one you choose depends purely on your risk profile, goals & objectives.

Mind you, if you forget to declare some investments, you’re going to end up with higher TDS.

3. Now the final step is accurately presenting proofs of all the investments you’ve declared previously. Here’s where most people make major blunders.

See, if you fail to submit proofs, your employer would be forced to recover the shortfall by deducting excess TDS.

This would be done in the remaining months & lead to a significant drop in cash in hand.

So make sure you plan your investments carefully to optimally save on taxes. And by the way, you still have time to purchase health & life insurance to cut down on TDS.