Open FREE Demat Account

Income Tax Investment Proof Submission – Avoid 5 Mistakes

Income Tax Investment Proof
Income Tax Investment Proof

For salaried employees, it is the time of the year to submit Income Tax Investment Proof. I know that we don’t like this exercise as it is tedious depending on length and breadth of investments. In this post, i will not discuss nitty gritty of tax savings or whether you availed all the deductions or not. This post will discuss being a salaried taxpayer what all points to check or taken care of to avoid mistakes before submission of Income Tax Investment Proof. Always remember that your employer is only responsible for TDS deduction based on your Income Tax Investment Proof submission. The employer cannot be held accountable if any wrong information is provided by the employee.

Before we proceed, i would like to share my earlier post i.e. Savings Tip – Back Load TDS. By implementing the tips shared by me in the post, you can effectively increase net take home salary by 8%-10%. That too without any efforts :). Secondly, you can also check my post 51 Important Points related to Income Tax. These two posts are linked to Income Tax Investment Proof submission.

Income Tax Investment Proof Submission – 5 Common Mistakes

1. Maintain a photocopy of Income Tax Investment Proof: In the majority of the cases, an employee does not maintain a photocopy of Income Tax Investment Proof. It is one of the biggest mistakes. You may remember for 3-4 months all the details submitted. Employees with a good memory will remember for one year but what next. Not many taxpayers are aware that Income Tax department can open your case within a period of six assessment year from the end of the assessment year in which the return is filed.

For example, during current Assessment year 2015-16, you filed a return for FY 2014-15. Now this year’s return can be called for scrutiny or opened till March 31, 2022. In other words, an Income Tax Return can be opened for scrutiny up to seven financial years from the end of the current financial year. Assuming my ITR is opened for scrutiny after five years in 2020. At that time, i will not remember details of Income Tax Investment Proof for FY 2014-15. A copy of Income Tax Investment Proof submission will come handy.

2. Financial Planning for Balance Months: An employer takes declaration from employees related to Income Tax Investment Proof at the beginning of FY. At that time, the only declaration is given, and employee gives the undertaking to provide Income Tax Investment Proof at the end of the FY. Usually, it happens that we are not able to invest as per initial declaration to save tax.

Let me take a practical example of one of my client. She had home loan, and she declared X amount as a deduction for Home Loan at the beginning of FY for Income Tax Investment Proof. It reduced her TDS liability considerably. Now in between she prepaid her home loan as she received a gift from her parents. She continued enjoying high take home salary until the time of Income Tax Investment Proof. When she submitted her Income Tax Investment Proof, the tax liability increased considerably. All the home loan tax deductions declared were reversed. She did not receive her salary for the month of Feb and March. On top of that, her employer demanded Y amount towards lower TDS deduction initially. She had to take a loan from her parents to take care of household expenses in Feb and Mar.

Therefore, you should do proper financial planning to take care of future expenses in case of mismatch in declaration and actual Income Tax Investment Proof.

3. Income from other sources: In many instances i observed that employer has stopped providing an option to declare Income from other sources. Generally, Employees don’t take this option seriously. An employee has to calculate and just declare the same. Income Tax Investment Proof is not required for this section. The employer does not accept declaration due to wrong info provided in most of the cases. In the event of income tax scrutiny, an employee claim ignorance. As there is no proof submitted, therefore, it put the employer in a fix.

It is important to check whether your employer is providing an option to declare income from other sources or not. If not then you need to calculate and deposit self-assessment tax on income from other sources. In many cases, the employee unknowingly ignored this column and then received notice from income tax declaration for non-declaration of income.

4. Bills for Perquisites and Allowances: As i shared in my posts on Perquisites and Allowances that an employee need to submit bills for some of these tax saving options. If you do not submit bills at the time of Income Tax Investment Proof, then the entire amount paid in advance will be taxable. Therefore, it is important to clarify from your employer. Though you might be receiving allowance and perquisite on a monthly basis. The bills should be submitted at the time of submission of Income Tax Investment Proof.

5. Declaration for Future Investment: This is another common mistake by employees. Assuming, my last date of Income Tax Investment Proof submission is Jan 20 with the employer. In this case, there is a possibility that i might be making some more investments at later date i.e. in Feb or Mar. For example, the premium for my LIC policy is due in Mar. In another case, an SIP was due in Feb or Mar for one of my client or Rent to be paid in Feb and Mar. In such cases, the employee has to submit a declaration with the employer on all such future investments. Based on employee declaration, the employer considers them for TDS purpose. Therefore, an employee should submit declaration so that it should be considered by your employer. Otherwise, you will miss the tax benefit.

Words of Wisdom: A small mistake or error in the submission of Income Tax Investment Proof may cost heavily. Therefore, the employee should take this exercise seriously. Normally an employer gives at least 30 days time to complete this exercise but like Income Tax Return, i found that 80% employees submit on last day only. I was also among this majority, but one mistake changed my life. After that, i was the first one to submit the proof. I was benefited being the first one. The HR team had sufficient time to check my proofs. In the case of any error or mistake, they used to alert me.

Copyright © Nitin Bhatia. All Rights Reserved.

Subscribe
Notify of
61 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Shadab
Shadab
8 years ago

Hi Nitin,

This post is really an eye opener. I did not know that IT dept can go back up to 6 years. Thanks a lot for sharing.

I have few questions in this regard.

1. What an employer does with the IT declaration proofs? does it goes to Income Tax dept?

2. Majority of employees submits fake house rent receipts and get tax exemptions even though they live in own flat. can it be tracked?

3. Height of HRA exemption is employees declares annual rent of more than a 1 lakh and declare that owner doesnt have PAN card to get higher tax exemption, what income tax department does in such case because proof documents will be with employer even While filing return we just need to fill information in ITR-V looking at Form 16 provided by employer, so employee need not submit IT declaration proofs again to CPC. I have heard that some companies even does not ask employees to submit rent receipts upto 15K a month. they just need to declare to get exemption. My organization has started taking soft copies of IT declaration proofs.
process doesn’t seems to uniform across organizations and transparent as well.

4. 90% of the owners ask tenant to pay rent in cash so its obvious they will not share their PAN no. with us if annual rent exceeds 1 lakh. In such case it is ok to declare that Owner does not have a PAN card.

Could you please put some light on this?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Shadab

Thanks Shadab for being a regular reader of this blog. To answer your queries
1. An Employer verify the proofs submitted by the employees and retain them for future reference. The TDS is deducted based on proofs submitted.
2. Yes it can be tracked but there is a loophole to declare that the landlord does not have PAN.
3. I do agree with you that it is grey area. Normally the work load on AO is so much that low value cases are not tracked. In case of scrutiny, am employee can be land in a big trouble. As you must have heard of famous proverb in Hindi that “Chori Woh Hain Jo Pakdi Jaaye”. It means only those irregularities are tagged as theft that are caught.
4. You may take declaration from owner with signature that he does not have PAN card. Any wrong declaration from him will put him in trouble. An employee cannot declare from his end without declaration from owner. Ideally the rent should be paid through cheque/online.

Shadab
Shadab
8 years ago
Reply to  Nitin Bhatia

Thanks Nitin for your Valuable advise.
One more query is I am paying home loan EMIs and my Flat is under construction. In Pune Builders asks buyers to register under construction property within 45 days after booking. Hence I did the same. Last year I have got tax exemption for registration cost under 80C. However I haven’t declared my home loan EMI principle/Interest because I have read that I should wait till I get possession and then declare Interest amount in 5 EMIs in consecutive year.
This process looks little complicated because another 5 years also I will be paying EMIs, I would need lot of calculations every year.

Can I just declare home loan principle paid in this financial year under 80C, I am expecting to get possession by mid of 2017. please suggest.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Shadab

I will not suggest. It is not allowed.

Shadab
Shadab
8 years ago
Reply to  Nitin Bhatia

Does it mean that Principal component in Home Loan EMI paid during under construction period is not at all applicable for tax exemption? Just wanted to confirm.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Shadab

Your understanding is correct. A buyer can claim tax deduction by giving false declaration as the property is already registered but i will not suggest.

Shadab
Shadab
8 years ago
Reply to  Nitin Bhatia

You are right Nitin, Even if the property is registered, It can easily be tracked that its under construction because EMI is directly linked with Disbursed amount. Fully disbursed loan will have constant EMI throughout the financial year as long as the interest rate remains constant.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Shadab

Just to add constant EMI is not a pre-condition as EMI can vary under normal conditions also. The key point is that buyer is giving wrong declaration w.r.t status of the project that can be easily found by IT department.

ganesh
ganesh
8 years ago

Hi Nitin,

Can I claim HRA exemption for a property rented out in a city situated 200 kms away from my workplace?

Thanks

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  ganesh

No. It is not possible to commute such a long distance on daily basis.

Bijit Das
Bijit Das
8 years ago

Income tax return fill for the year 2007-2008 assessment year. Last 7 years ago but till date refund not processed, due to my company is not deposited the amount of Rs22000 /, company already given me form16.what I do please suggest.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Bijit Das

Sorry i could not understand. I think you are referring that company has not deposited TDS. In this case, refund will not be issued. If your TDS was deducted then you may inform income tax department they will investigate.

Gaurav Gupta
Gaurav Gupta
8 years ago

Dear sir, can i show house rent receipt in my organisation for tax saving ( to complete Rs 1,50,000) along with house loan repayment slip. ( coz now my house lone interest in less now ).
please guide at gauravgupta2022@gmail.com

thanks and regards
Gaurav

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Gaurav Gupta

Sorry i could not understand your query.

Gaurav Gupta
Gaurav Gupta
8 years ago
Reply to  Nitin Bhatia

I have submitted my house loan repayment receipt in my office. But this amount is less than 80C limit of saving ( Rs1,50,000 ) Can i submit house rent slip also to complete Rs 150000 saving limit ?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Gaurav Gupta

It depends on location of your office, rented accommodation and your property. If your house is let out then you can claim loss from let out property.

Gaurav Gupta
Gaurav Gupta
8 years ago
Reply to  Nitin Bhatia

I live in kota, property is situated in Jaipur.I am living in rented house in kota. I am paying total house lone of Rs 6750 per/month. Which is not reaching at Rs 150000 ( limit of 80C). can i submit house rent receipts also to complete Rs150000 ( limit of 80C exemption ) ?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Gaurav Gupta

You can claim HRA.

Gaurav Gupta
Gaurav Gupta
8 years ago
Reply to  Nitin Bhatia

Thanks a lot sir !
Three cheers for you

Sandeep s r
Sandeep s r
8 years ago

Hi Sir,

I resigned from company last august and came to US for higher studies. I am trying to file IT returns as i should get some tax refund. As i couldn’t submit 80C related proofs at that time i am trying to do now. is it possible to submit 80C related proof documents online? Earlier i used to send it via speed post along with the final ITR acknowledgement. How do i do now?

Thanks,
Sandeep

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Sandeep s r

You need not submit any documentary proof for 80C. It is required only in case of any clarification from IT department.

Chaitanya Joshi
Chaitanya Joshi
8 years ago

Is there any tax liability on me for cash gift received during my sons marriage which I deposited in my bank account?

Nitin Bhatia
Nitin Bhatia
7 years ago

All the cash gifts received by you on your son’s marriage are taxable in your hand and you need to pay gift tax.

Chaitanya Joshi
Chaitanya Joshi
7 years ago
Reply to  Nitin Bhatia

thank you sir, can i show it as gift from son to me and then my son can show it as gift from marriage in his hand to prevent any taxability.

Nitin Bhatia
Nitin Bhatia
7 years ago

You can do that.

Sapan Malhi
Sapan Malhi
7 years ago

Hi Sir,
I did submit all the tax proofs for the investments declared by me to the employer. But after the tax proof submission deadline, I purchased a Medical Insurance Policy for my parents. I know that it can be claimed under Section 80D deductions. How do I submit the proof for the same to the Income Tax Department as I am e-filing my return.

Thanks in advance,
SMalhi

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Sapan Malhi

You need not submit the proof to the IT Department. You can mention the same in your ITR and claim the refund of any excess TDS deducted by your employer.

Sapan Malhi
Sapan Malhi
7 years ago
Reply to  Nitin Bhatia

Thanks a lot Sir, for the reply as well as for writing a very informing article.

Nikunj Aggarwal
Nikunj Aggarwal
7 years ago

Hello Sir,

For the financial year 2015-16 I did my investments in NSC in the month of March 2016 and was not informed to my employer. So they deducted the tax. Now I am filing the income tax return. So can I get the return of eligible tax by mentioning the investment in the ITR? I am filling ITR through clearTax portal and I mentioned the investment there but there is not any option available to upload the scan copy of any investment proof. Does mentioning the amount will be enough or I will have to upload the copy of investment proof?

Geet Kumar
Geet Kumar
7 years ago

As pe my knowledge you do not need to submit any scan copy at ClearTax just keep it with you somewhere online safe. You can just ass all 80C and total amount can be updated at investment section on ClearTax.

Nitin Bhatia
Nitin Bhatia
7 years ago

You can mention the amount and claim tax deduction. You need not upload or provide any investment proof. Income tax department knows all the details.

ar
ar
7 years ago

Hello sir

Im wrkng in a Public Sector bank and in my HRMS package I decleared an investment of 150000 at the time of joining the bank in June 2016, but, I didnt invest any amount in that FY. But, unfortunately my Manager Autorised that investment without checking my INVESTMENT PROOF.
Now please guide me how to rectify this mistake.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  ar

You re-calculate your tax liability and pay self assessment tax. At the time of filing ITR you should not claim any deduction u/s 80C.

Prem
Prem
7 years ago

Hi Sir, my parents gave me money for home loan repayment through online transaction, does it needed to mention in ITR ?, Does this money will be taxable?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Prem

You need not mention in ITR. A gift from father/mother to son/daughter is tax free in the hands of son/daughter.

amar
amar
7 years ago

hello sir, this in in continuation to one of the queries you answered..

Hello sir

Im wrkng in a Public Sector bank and in my HRMS package I declared an investment of 150000 at the time of joining the bank in June 2015 but, I didnt invest any amount in that FY. But, unfortunately my Manager Authorised that investment without checking my INVESTMENT PROOF.

I have also e filed my returns based on the actual investment and salary details that I have at my hand and from 26AS (as i did not receive my form 16 by that time) and also claimed a refund. Will there be any problem from the IT dept.? I got from my employer the form 16 part b annexure today which shows extra investments(which I dint actually do). Will I be asked to show the investment details once the ITR V is processed? As we use the gross annual salary particulars (and not the total of net monthly salary after TDS ) from 26AS as my salary while e filing, I hope there will not be much problem. Please clarify as to what to do and how to refile my revised return if needed.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  amar

Sorry i could not understand how you received refund if the investments were not made. In fact, you must have paid tax as there was short TDS deduction by your employer.

amar
amar
7 years ago
Reply to  Nitin Bhatia

sir, as i mentioned i filed returns based on 26as and actual proofs of investments (i invested abt 1.1lac instead of 1.9l which i showed in my Investement declaration at the start of the financial year), so the returns showed me a refund. Yes, you are right in saying i must have paid some extra tax, but now as the returns have been filed without paying the extra amount, i just wanted to know how to pay tax for that year and how to file revised return.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  amar

You can re-calculate your tax liability and pay self assessment tax. Post that you can file revised ITR u/s 139(5).

Karnika
Karnika
7 years ago

Hello Nitin, I need to understand about HRA declaration if I am leaving a company in the mid of the year. This year my annual rent is more than a 1 lakh so I need my landlord’s PAN card details but since I am leaving the company in mid of the year do I still need to provide PAN card details of my landlord to submit the present employer or I can skip this?Please advise as I have to submit investment proofs (from Apr till Aug)

Nikhil
Nikhil
7 years ago

Hi Sir,

Last September I have received an an amount of 80000/- as the insurance claim for the road accident i had met some time back. I have deposited the cheque from the insurance company to my bank account. Do i need to mention this amount when i do IT returns for the AY-2016-2017? If yes, in which section do i mention and what should i mention?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Nikhil

No. You need not mention it anywhere as it is not a income for you.

Nikhil
Nikhil
7 years ago
Reply to  Nitin Bhatia

Thank you for your reply.

Dheeraj Arya
Dheeraj Arya
7 years ago

Hi Sir, i have done some savings under.
1. LIC
2. Education Loan
3. PPF
4. Mutual funds
5. House Rent

But i missed the investment details/proof submission for this year.

Can i show these things while filing the IT return?

Thanks

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Dheeraj Arya

Yes you can.

Prasad Sheth
Prasad Sheth
7 years ago
Reply to  Nitin Bhatia

Sir same for me. So now will tax be deducted by company and the there will be refund from IT dept?

Prasad Sheth
Prasad Sheth
7 years ago
Reply to  Prasad Sheth

Correcting above query.
Sir same for me. So now will tax be deducted by company? What are my other options to submit proof to IT dept? When I fill the return, tax deducted will be refund from IT dept?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Prasad Sheth

Company will deduct TDS and you can claim refund at the time of filing of ITR. You need not submit any proof to IT department.

Kashyap
Kashyap
7 years ago

Hello Sir,
I invested Rs. 30000 in ULIP of a private bank and has show it in investments with payment receipts to my employer. The investment is now marked as verified in tool. Later when i came to know complete details about that plan during tele-verification, i decided to cancel it. Few days back i got refund of Rs 30000.
I am unable to remove this investment deceleration from my employer site as it was already verified.
The agent is threatening that this will be a tax evasion issue and forcing me to opt for that plan again.
How to come over this situation. I don’t want to invest in that policy. If i invest that Rs. 30000 in any other place say FD or PPF and file the proof during return, will it work as a solution?

Kashyap
Kashyap
7 years ago

Hello Sir,

I have invested Rs.30000 towards ULIP through a private bank in the beginning of January. I have submitted it for investment proof submission to my employer with payment receipt.

During the televerification from bank, i came to know complete details about the plan which were hidden by the agent. So i had decided to back off and request for cancel and refund. My request was processed and got refund of Rs.30000 two days back.

When i went to undo the Rs.30000 which i had declared on employer’s payroll site, It is now showing verified and i am unable to modify it on Payroll site of my employer.

The agent is threatening me that this will be tax evasion issue and forcing me to opt the plan but i am not at all willing to interest.
How to overcome this situation? If i invest this 30000 in any other place say PPF or FD and show it during ITR filing, will this be a solution to compensate?

For 4lpa package, I have already paid Rs.4056 tax via TDS where i am supposed pay after rebate of Rs.5000 is only Rs.3630 (calculated after excluding Rs.30000 investment)

Kindly suggest how to procees sir.
Thank you in advance.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Kashyap

You need not worry. Agent is misleading you. You can correct at the time of filing of ITR, re-calculate tax liability and can pay self assessment tax if you would not like to invest this amount.

In case you invest this amount in any other tax saving instrument then also you can declare it in ITR and remove the exemption claimed for ULIP. The tax liability will remain the same.

Nilina
Nilina
7 years ago

Hello Sir,I joined a new company in month of Feb. I have already submitted Investment proof for financial year 2016-2017 to my previous company. Do I again need to submit the proof in my new company?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Nilina

Yes. Otherwise you can submit the tax sheet of previous company to new company so that deductions/exemptions are considered only once for tax calculation.

Rakesh PM
Rakesh PM
7 years ago

Hello Sir, I had to sell my gold jewels to purchase a plot. I received 5 lakhs and deposited it in my bank last december. Do i need to mention this amount when i do IT returns If yes, in which section do i mention and what should i mention?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Rakesh PM

No. You need not mention this amount in ITR.

srinidhi somayaji
srinidhi somayaji
7 years ago

Hi Sir,
i invested in NSC feb2017, can i use this investment for declaration in april 2017?

Nitin Bhatia
Nitin Bhatia
7 years ago

You have not mentioned you are referring to principal amount invested or interest.

Ponpal Johnson
Ponpal Johnson
7 years ago

Nitin, Thanks for the post!
This is a life saver.

Sri Nag
Sri Nag
7 years ago

Hi Sir,

I have did the investment declaration this month (today ) , Unfortunately unable to declare last month. Would the tax for this month will be computed as per the new investment declaration. How is it?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Sri Nag

It depends on your companies policy and deadline/cut off date to process the salary.

shreshtha
shreshtha
7 years ago

Hello Nitin,

I had filed ITR in an online website last year and got the whole money refunded. Now due to house shifting I have lost most of the proofs.

What can be done? What are the consequences?

Shopping Cart
Scroll to Top