Income Tax Proof Submission: What Happens If You Miss the Deadline?
Filing income tax returns can be a complex process, and one crucial part of it is the submission of income tax proofs to claim deductions and exemptions. This documentation can help reduce your taxable income and maximize your savings under various sections of the Income Tax Act. However, missing the deadline for submitting these proofs can lead to unexpected financial consequences, such as higher taxes deducted from your salary and a reduced chance to claim tax-saving benefits.
In this article, we will explore what happens if you miss the deadline for submitting income tax proof and the steps you can take to address the situation.
Table of Contents
Consequences of Late Submission
When employees fail to submit investment proofs by the employer's deadline, their employer deducts a higher TDS (Tax Deducted at Source) from their salary. TDS is a system where employers are required to deduct a portion of an employee's income as tax and deposit it with the government on the employee's behalf.
This results in lower take-home pay because the tax deduction is higher than it would be if all eligible deductions and exemptions were applied. At the start of the financial year, tax deductions are typically based on the investments you declare, but the final TDS deduction in March depends on the actual proof you submit. If you miss this deadline, the employer will assume no deductions and withhold the maximum applicable tax.
Additionally, any expenses or investments made after March 31st cannot be used to reduce your taxable income for that financial year. To avoid losing out on these benefits, it's crucial to plan your investments carefully and ensure you submit the necessary proofs by the deadline.
Reasons to miss the deadline for income tax proof submission
It's not uncommon to miss the deadline for submitting income tax proof due to various factors, such as lack of awareness, job changes, personal circumstances, or administrative oversights. If you do miss the deadline, it’s important to remember that while your employer may deduct a higher TDS, you can still file an Income Tax Return (ITR) to claim a refund for any excess taxes deducted. By submitting the necessary evidence while filing your ITR, you may be able to recover the amount overpaid.
Proofs to claim the deduction with investment declaration
As a salaried employee, various proofs can be submitted along with an investment declaration. To claim the deductions. These proofs include-
Life insurance premium receipts
Any life insurance premium paid for the child or spouse can be claimed as a deduction. 80C deduction is valid on the insurance policy purchased after 1st April 2012. And the premium should also be 10% less than the amount assured. The deduction can be claimed for the full amount paid premium which includes service tax and other charges.
These receipts include the details about the policyholder, insurance company, policy number, premium amount, payment date, mode, and receipt number. To claim deductions on life insurance premiums, you must submit these premium receipts along with your income tax return. The specific deductions available may vary depending on the type of insurance policy and your circumstances. Generally, you can claim deductions under Section 80C of the Income Tax Act for premiums paid on certain life insurance policies.
Health insurance premium receipts
Purchasing a health insurance plan enables one to claim a deduction of INR 25,000. On the medical insurance premiums. Besides the tax savings, financial protection is provided to you and your family in medical emergencies.
The tax benefits can be availed under section 80D. The deduction amount varies based on the age of the insured individuals and the type of health insurance policy. For Individuals above 60 years, A deduction of up to ₹50,000 is allowed for premiums paid for self and family. For Senior Citizens, an additional deduction of up to ₹50,000 is allowed for premiums paid for senior citizens.
It is important to retain health insurance premium receipts for a minimum of six years from the end of the assessment year in which the deduction is claimed. These receipts can be required for verification by the tax authorities in case of any scrutiny or audits.
By carefully preserving health insurance premium receipts and understanding the applicable tax deductions, individuals can effectively reduce their taxable income and maximize their tax savings.
Investment statements
These statements include investments like ULIPS Unit linked insurance plan, ELSS Equity linked savings scheme and mutual funds, PPF, etc. Along with annuity plans within the provided limits.
Investment statements provide detailed information about the investments made, allowing individuals to avail of tax benefits under different sections of the Income Tax Act. The detailed information included is name, address, PAN number of investor, investment type, amount, maturity date, interest gained, and capital gains.
Rent receipts
Rent receipts are crucial documents that serve as evidence for claiming deductions on rental payments. These receipts typically contain information such as name, address, PAN number of the owner and tenant, property address, rent amount, payment date and mode, and receipt number.
To claim deductions on rental payments, you must submit these rent receipts along with your income tax return. The specific deductions available may vary depending on your circumstances, but generally, you can claim deductions for rent paid for a self-occupied property or a property let out for rental income.
Home loan interest statement
A Home Loan Interest Statement is a necessary document that serves as evidence for claiming a deduction on your income tax return. This statement is issued by your lending institution (bank or housing finance company) and outlines the interest paid on your home loan during a specific financial year.
Under section 24 (b), you can deduct up to INR 2 lakh of interest paid on a home loan. If the loan is taken before April 1, 2017, you can claim a deduction of up to INR5 lakh. If you are a first-time home buyer, you can claim an additional deduction of up to INR 1.5 lakh under Section 80EEA. This deduction is available for loans sanctioned between April 1, 2019, and March 31, 2025.
Donation receipts
Under it, donation receipts need to be submitted. As per the Income Tax Act. A donation receipt works when you donate to a qualified charitable organization. The receipt includes the name of the organization, donation date, description of the donation, fair market value, taxpayer name, and address.
There are various benefits of donation and claiming deduction. Like charities, donation helps to provide some support. Claiming deductions can reduce your taxable income and save you money on taxes. The tax benefits encourage individuals and organizations to donate to charitable causes.
Tuition fee receipt
If you paid any tuition fee for your children, then a payment receipt needs to be submitted. To call it a deduction. In many countries, taxpayers can claim deductions for educational expenses, including tuition fees. These deductions often fall under the category of "itemized deductions" or "above-the-line deductions."
This deduction allows taxpayers to deduct the interest paid on qualified student loans. In certain cases, tuition fees might qualify as miscellaneous deductions, subject to limitations and thresholds.
How much to claim in deductions?
Determining the optimal amount to claim in deductions on your income tax return involves carefully considering your financial situation and the specific tax laws in your jurisdiction. Here are some key points to keep in mind:
Itemized Deductions vs. Standard Deduction:
Itemized Deductions: If you have significant expenses such as mortgage interest, charitable contributions, medical expenses, or state and local taxes, itemizing your deductions may result in a higher deduction than the standard deduction.
Standard Deduction: The standard deduction is a fixed amount set by the tax authorities. It varies based on your filing status (single, married filing jointly, etc.). If your itemized deductions are less than the standard deduction, it's generally more advantageous to claim the standard deduction.
Factors to Consider:
Income Level: Higher-income earners may benefit more from itemizing deductions due to the progressive nature of income tax.
Expenses: The amount and types of your expenses will significantly impact your decision.
Tax Laws: Familiarize yourself with the specific tax laws in your country or state, as they can vary.
Professional Advice: Consulting with a tax advisor can help you accurately calculate your deductions and determine the most beneficial approach for your situation.
What to do for additional tax savings?
If your taxable income exceeds the tax-free limit even after factoring in your Provident Fund (PF) and House Rent Allowance (HRA) deductions, there are other tax-saving investments to consider:
Equity Linked Savings Scheme (ELSS): This mutual fund scheme invests in equity markets and offers tax deductions under Section 80C.
Public Provident Fund (PPF): A long-term, government-backed savings scheme that offers tax deductions on both contributions and interest earned.
National Pension Scheme (NPS): This voluntary pension scheme offers tax deductions under Section 80C and provides a secure post-retirement income.
By carefully planning your investments and submitting the necessary proofs, you can significantly reduce your taxable income and increase your tax savings.
Popular tax-saving investments
Popular tax-saving investments provide individuals with the chance to reduce their taxable income and save money on tax. These investments come with additional benefits like long-term wealth creation and financial security.
Here are some of the most popular options:
1. Equity Linked Savings Schemes (ELSS)
It is a mutual fund scheme that invests primarily in equity stocks. They offer a unique combination of tax benefits and potential for capital appreciation. ELSS investments are eligible for tax deductions under Section 80C of the Income Tax Act, up to Rs 1.5 lakh per year. This helps reduce your taxable income and save on taxes. ELSS funds have a mandatory lock-in period of three years. This means you cannot withdraw your investment before the end of three years.
Overall, ELSS can be a good option for investors who are willing to take on higher risks in exchange for the potential for higher returns and tax benefits. However, it's important to consider your investment horizon, risk tolerance, and financial goals before investing in ELSS.
2. Term Life Insurance
Term insurance is a vital life insurance option that provides financial security for your loved ones in case of unexpected passing. The premiums you pay for your term insurance plan can be deducted from your taxable income up to Rs. 1.5 lakh in a financial year under Section 80C.
When purchasing term insurance early in life, consider an increasing term insurance plan. This allows you to increase your coverage at a lower cost and with minimal effort.
3. Public Provident Fund (PPF)
PPF is a long-term savings and investment scheme offered by the Indian government. It is a popular choice for individuals seeking a safe and secure investment option with tax benefits. PPF contributions are eligible for tax deduction under Section 80C of the Income Tax Act, up to Rs. 1.5 lakh per year. Interest earned on PPF is also tax-free.
The minimum lock-in period for PPF is 15 years. However, you can extend it in blocks of five years. The interest rate for PPF is declared quarterly by the government and is generally higher than other fixed-income instruments. PPF is a suitable investment option for individuals who prioritize safety and security over high returns. It is a low-risk investment with a guaranteed return, making it a popular choice for retirement planning and long-term wealth accumulation.
4. National Savings Certificate
NSC is a government-backed investment scheme in India that offers a fixed interest rate and a guaranteed return. They are popular for their safety and tax benefits. NSCs offer a fixed interest rate for the entire tenure, providing a predictable return. Investments in NSCs are eligible for tax deductions under Section 80C of the Income Tax Act, up to Rs. 1.5 lakh per year. Interest earned on NSCs is also tax-free.
NSCs have a maturity period of either 5 or 10 years. You can take a loan against your NSCs after the completion of three years. While early withdrawal is generally not allowed, there may be some exceptions under certain circumstances.
5. National Pension Scheme
National Pension Scheme (NPS) is a voluntary retirement savings scheme introduced by the Government of India. It aims to provide individuals with a regular pension after retirement. NPS has two tiers: Tier I and Tier II. Tier I is mandatory for all subscribers, while Tier II is optional. Subscribers can choose from various investment options, including equity, corporate debt, government securities, and alternative investments.
Contributions to NPS are eligible for tax deductions under Section 80C of the Income Tax Act, up to Rs. 1.5 lakh per year. Partial withdrawals after the age of 60 are also tax-free. Subscribers can choose to withdraw their accumulated pension wealth as a lump sum or as a regular pension. NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
6. Home Loan Interest
It refers to the cost of borrowing money to purchase a home. It is typically calculated as a percentage of the outstanding loan amount. Home loan interest is a deductible expense under Indian income tax laws.
Home loan interest is eligible for tax deduction under Section 24 of the Income Tax Act. You can deduct up to Rs. 2 lakh of interest paid on a home loan during the financial year. If you are a first-time home buyer, you can claim an additional deduction of up to Rs. 1.5 lakh for interest paid on your home loan under Section 80EE.
Home loan interest can be calculated using different methods, such as reducing balance and flat rate methods. The tax benefits associated with home loan interest can significantly reduce your taxable income and save you money on taxes.
Investment Proof Submission Last Date For FY 2024-25
For the financial year 2024-25, the deadline for submitting your investment proofs to your employer is typically January. Financial experts recommend completing your transactions and submitting your proofs early to avoid delays. While your employer may set an internal deadline earlier than March, the ultimate tax proof submission deadline is March 31st of the financial year.
FAQs
Q1. Can I submit the proof of income tax after the deadline?
If you fail to submit the investment proof by the deadline. It can result in consequences like deduction in TDS from the salary.
Q2. What are the penalties for missing the tax declaration?
If you fail to file your income tax return on time, even if you owe taxes, the tax department may charge a penalty of 1% per month starting from the original due date. To avoid any additional costs, it's important to submit your return before the deadline
Q3. Can I claim LTA if not mentioned in Form 16?
If you cannot claim LTA If you're unable to fully utilize your Leave Travel Allowance (LTA) exemption in one tax year, you can carry forward the unused portion to the following year. However, it’s important to remember that the LTA exemption isn't directly included in your income tax return. Your employer will verify your LTA claim and include it in your Form 16.
Q4. How much can I claim under HRA?
If your employer provides you with a House Rent Allowance (HRA), you can use it to reduce your taxable income. To calculate your HRA deduction, first, subtract 10% of your basic salary from the actual rent you pay. The remaining amount is eligible for deduction.
The maximum deduction allowed for HRA depends on your city of residence. If you live in a metro city, you can claim up to 50% of your basic salary. For those living in non-metro cities, the maximum deduction is 40% of your basic salary.
Q5. Is it mandatory to submit tax proofs?
It's important to submit your tax proofs by the deadline set by your company. If you miss the deadline, your employer may withhold more taxes from your paycheck.
However, there might still be ways to save on taxes, even if you've missed the deadline. It's a good idea to consult with a tax expert for personalized advice
Q6. Who is required to submit tax proofs?
Salaried employees are required to submit tax proofs. To ensure accurate TDS deduction by the employers. Your employer is required to withhold taxes from your paycheck each year. To ensure that the correct amount of taxes is deducted, it's important to provide your employer with accurate investment proof. If you don't, you may end up paying more taxes than necessary.
Q7. Do companies verify tax proofs?
Your company's finance and payroll departments carefully review the investment proofs you submit. They use this information to calculate your income tax, determine the amount of taxes to withhold, and process your salary. This ensures that you pay the correct amount of taxes.
Q8. What happens if form 12BB is not submitted?
If you accidentally forget to give your employer Form 12BB, they won't be able to include certain deductions and tax benefits on your salary. However, you can still claim these benefits when you file your income tax return.
Q9. Does the company verify the document submitted in the investment declaration?
Your employer is responsible for verifying the accuracy of the documents you upload. It's important to submit only authentic documents to avoid any issues. If you submit fake documents, it could lead to disciplinary action from your company.
Q10. Can you submit investment proofs while filing your returns?
If you accidentally forgot to include some of your investment proofs on Form 12BB, you can still declare them when you file your income tax return. This might even qualify you for a tax refund.
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