Submit investment proof to reduce TDS by March 31: Details here

As FY24 ends soon, employees need to buck up and declare investments to lower their TDS

As the current financial year 2023-2024 (FY24) nears its end, employees who haven’t already done so need to buck up and seize the opportunity to lower their Tax Deducted at Source (TDS) by declaring their intended investments. Taking this proactive step can significantly reduce TDS for the majority of the year.

The period from January to March is a crucial phase in the financial calendar. During these months, employees must back up their earlier declarations with actual proof of investments. Missing this window can lead to an uptick in TDS deductions from their salary.

Role of Form 12BB

As the year draws to a close, finance teams begin the task of collecting and verifying investment proofs through Form 12BB. This step ensures that the calculations of income tax are accurate and reflect the actual investments made by the employee. It's important to note that for the month of March, the computation of TDS hinges on the submission and approval of these proofs.

What deductions can you claim from Form 12B

1. HRA (House Rent Allowance)

To claim HRA, add the name and address of your landlord along with copies of your rent receipts. If your total rent crosses Rs. 1 lakh, submit the PAN number of your landlord.

2. LTA (Leave Travel Allowance)/ LTC (Leave Travel Concession)
 

Add the amount and proof of expenses you have incurred for travel to claim LTA and LTC.

3. Interest payable on home loan

As per Section 24 of the IT Act, you can claim tax benefit for the interest on your home loan by submitting the interest certificate from your lender. Enter the interest amount you have paid along with your lender’s name, address and PAN in Form 12BB to do so.

4. All tax deductions (such as sections 80C, 80D, 80DD, 80G, 80GGA, 80GGC, 80TTA, 80U)

Section 80C: This section is favoured by many for its provision allowing deductions up to Rs 1.5 lakh from taxable income through specified investments.

Section 80CCD: This allows an extra deduction of Rs 50,000 for contributions made to the National Pension System (NPS), enhancing tax savings. Details here

Missed deadlines: What next?

Failing to submit investment proofs on time isn't the end of the road. Employees can still make eligible investments up to March 31 and claim these deductions in their income tax returns filed before July 31.