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There are instances when an employee gets confused as to what needs to be mentioned in the Investment Declaration Form in order to claim deductions and exemptions. It must be noted that the Investment Declaration Form will be submitted to the employer and not the Income Tax Department.
An Investment Declaration Form can be defined as a provisional statement of claims that is submitted by the employee to his employer. The form contains details about the proposed investments and expenses that are income tax deductible to claim tax deductions and exemptions on the salary depending on the salary structure of the employee. This form is very important because the employer uses this form to calculate TDS based on the employee’s salary.
The employee needs to submit the supporting investment proofs of the proposed investments specified in the declaration form. Such investment proofs can be in the form of health insurance receipt, receipt of donation, investments in tax saving mutual funds, insurance premiums.
This form can be submitted after the commencement of the financial year till 3 months prior to the closing of the financial year. It is submitted via Form 12BB.
Here is the list of few things that an employee must mention in his/ her investment declaration form.
For an employee to claim deductions under HRA, following details need to be provided:
If a salaried employee wants to claim deductions under Leave Travel Concessions or Allowance, then the employee needs to furnish the leave related expenditure proofs to the employer.
The total amount of the expenditure along with the related documents needs to be mentioned in the form 12BB by the employee.
A. Deductions sought under Sections 80C, 80CCC and 80CCD
B. Deductions sought under Sections like 80E, 80G, 80TTA etc.
It is very normal of employees failing to submit the Investment Declaration Form to their respective employers. If an employee fails to submit the Investment Declaration Form to the employer, then the employee shall not be able to avail the benefits of deductions under the above mentioned various categories. Consequently, the employee shall be liable to pay full Tax Deducted at Source and also the employer not having the required information of the possible expenses from the employee’s end will be forced to deduct TDS on the gross salary of the employee. This may result in employer deducting an exorbitantly high TDS where it was supposed to be less in amount.
There is nothing to be worried about if an employee fails to submit the Investment Declaration Form to the employer despite greater deduction of TDS. The employee can always claim a refund of excess amount of TDS deducted by the employer at the time of filing Income Tax Returns. The employee at the time of filing ITR can disclose his/ her actual investments, deductions and expenses before the due date of filing of ITR.
However, this process is very time taking and cumbersome since the excess amount of TDS deducted by the employer due to failure to submit Investment Declaration Forms shall be refunded only at the time of filing of ITR in the next year. Therefore, it is always advised an employee must always submit his/ her Investment Declaration Form within time.
Read our Article:Understanding the Difference between TDS and TCS