It’s a common problem at the end of the financial year. The employer sets a deadline, usually March 15, as the last date for accepting proof of reimbursements. But you are unable to do so because either you have not kept the documents properly or were on leave. Can you claim tax benefit for that while filing income-tax return (ITR)?
There is a good chance that you can do so. It is the responsibility of the employer to collect evidence on behalf of the employee for any reimbursement like telephone bills, medical reimbursement or house rent allowance (HRA). If the employee does not submit evidence, it is the obligation of the employer to deduct tax and not give the tax benefit to the employee. But in such a case employee can technically claim the refund if he has actually incurred expenses.
Sanjeev Gokhale, a Mumbai-based chartered accountant, says: “Technically while filing returns you should claim the refund and it should be granted assuming you have the proof. In nine out of the 10 cases that we file for our clients, we have seen it is granted.”
In most cases, especially for those in the low-income bracket, there is usually no scrutiny or query from the Income-Tax Department. But the expense must be genuine and make sure you have documentary proof of those.
Those who could not submit evidence to the employer, maybe because of illness or travel, should arrange the evidence and then claim benefits, says Naveen Wadhwa, deputy general manager (research and development), Taxman.com.
“Typically in the case of employees with a low salary, say Rs 6-7 lakh, the I-T department does not ask for scrutiny. But if you are a high salaried individual and are claiming huge reimbursements, you could be issued scrutiny notice. But there is no guarantee that you won’t get a notice,” he added.
There is no need to attach proof while filing the ITR, but ensure that the proof is with you. If the I-T Assessing Officer (AO) wants to substantiate whether you have incurred the expense or not, you will be issued a scrutiny assessment notice. Hence, it is advisable to keep the proof for a period of five-six years.
Arvind Rao, of Arvind Rao and Associates, also says that reimbursements are part of the salary and hence the onus is on the employer to collect it. But HRA can be claimed even if proof is not submitted to the employer because it is an allowance and not a reimbursement. In case you have missed out on claiming leave travel allowance (LTA), you can claim it for the next financial year if your organisation’s policy permits you to carry forward the balance.
If you have missed submitting proof of your investments under Section 80, you can claim exemption while filing tax returns. These include the Public Provident Fund, Equity-Linked Savings Scheme, repayment of home loans, life and health insurance premiums, National Pension System, school fees for children, repayment of education loan, etc. Again, there is no need to submit proof as these days all tax returns are annexure-less and electronic, which means you are not supposed to attach any documents, say Preeti Khurana, Chief Editor, Cleartax.com
“Most employees think that if they don’t submit proof to their employer, they cannot claim the tax exemption. But that is not so. Employer is just an agent that is collecting tax on behalf of the government,’’ says Wadhwa.