Tax Benefits, India

Owned by Rajani Havannavar (Unlicensed)
Last updated: Jun 12, 2024 by Mukti Mukherjee
5 min read

These tax benefits typically are for people paying Indian taxes. Every financial year, you can declare investments to reduce the taxable income on your salary. You must submit proofs for all announced investments by year-end so that employer matching and proper taxation alignment are accurate. When investment proofs are lacking, your salary will have relevant taxes deducted from it.

All investment proofs submitted must be in the team member’s name and must belong to the current financial year.

The following guidelines should help with presenting evidence of that investment. When you have questions about any particular investment which is not covered in the below guidelines, please research the same on Google or with your CA. When you still have doubts, please reach out to people@axelerant.com.

Note: This list is not exhaustive, there may be more components covered under Tax exemptions in India, but we have captured only the most common ones.

Housing Loans EMIs

Team members can also claim interest paid on a housing loan for a self-occupied property of up to INR 2 lakh in a financial year. Also, the principal amount can be claimed under section 80C of the Income Tax Act up to a maximum of INR 1.5 lakh in a year.

  • A certificate from the bank which has your interest and principal details.

  • A document declaring team members’ ownership of the property.

  • Completion certificate of the house property from the builder (Interest can only be claimed after the occupation/completion of the property and preoccupation interest can be claimed in 5 equal installments)

    OR

    Self-declaration from the employee with the details of occupation.

House Rent Allowance

All the rent receipts must have a revenue stamp. You can submit one rent receipt of each quarter as proof or all the rent receipts for the financial year. For HRA, the following documents are mandatory and have to be submitted:

  1. Rent Agreement

  2. Rent receipts with revenue stamp

  3. PAN of Landlord

The proofs must have:

  • Name of the team member

  • Rent amount and period paid to the landlord

  • Address of the Rented Residence

  • Name, Address & Signature of the landlord

Life Insurance Premium

The Receipt of the payment issued by the Life Insurance Corporation or any other insurer listing:

  • Name of the insurer

  • The Premium amount

  • Period of premium paid. E.g., Financial Year 2021 - 2022

Note: Exemption for the entire premium amount including GST is allowed. The employee can also claim an exemption for their family - which includes only spouse and children.

Children Tuition Fees

Copy of Tuition Fees paid to the educational institution should be submitted as proof.

Note: Payment in nature of Donations, Capitation fees, Uniform fee, Sports fee, Van Fees, Shoes & Sock, etc., are not allowed.

Mutual Funds

You can get investment proof for mutual fund investments by getting your statements from your distributor. Alternatively, a consolidated email statement for all your mutual fund investments, including your ELSS funds.

  • Copy of investment certificate with the employee name, Investment Date, Amount, Type of Investment.

    Only the investments made under Tax Saving Fund / Plan will be considered

Fixed Deposit for a fixed term of 5 years in a Scheduled Bank/Post Office

  • Fixed deposit Certificate/Receipt issued by Scheduled bank or Post Office

Public Provident Fund (PPF)

You may submit - Copy of Passbook (front page and entries) with clear mention as PPF Accounts and with the name of the account holder, entries of the amount (or) Amount deposit Receipt or Counterfoil / Stamped challan along with front page of passbook (or) Online Amount deposit E-Receipt

Sukanya Samridhi Scheme (SSY)

Statement of account should hold the name of account holder, type of account, entries of the amount.(or) Passbook (front page and entries)should hold the name of account holder, type of account, entries of the amount. Sukanya Samriddhi Account should be in the name of daughter.

Medical Insurance Premium for Self/Spouse/Children/Parents

Allowed Premiums:

  • Preventive Health Checkup for Self/Spouse/Children/Parents

    • The bill has to explicitly say “preventive health checkup”. It should not be a procedure after an ailment has happened.

    • If the bills say “Diagnostic health check-up” - it is a good practice to get a declaration from the employee saying it is a preventive one.

  • Paid Receipt for Health Check-Up for the current financial year

  • There is no benefit for 80D if paid in cash, other than for preventive health check-ups.

    • For other types of proofs under 80D, you’ll need to submit an undertaking letter that you have paid it in electronic form (NEFT, IMPS, etc.)

The Premium paid receipt must contain:

  • Name of the insurer

  • Amount of premium paid

  • Period of premium paid. E..g, the financial year 2021 - 2022

  • Age of the insurer

National Pension Scheme (NPS)

  • Receipt or statement of investment issued in the team member’s name and in the period of funding.

  • Also, copy of the Passbook with clear mention as NPS Account will work

Tax Benefits:

  • Employee contributions up to INR 1.5 lakh are eligible for tax deduction under Section 80CCD(1).

  • Additional tax benefits of up to INR 50,000 are available under Section 80CCD(1B) for contributions to NPS.

Withdrawal Rules:

  • Partial withdrawals are allowed after three years of joining NPS for specific purposes like education, marriage, home purchase, and medical treatment.

    • Upon reaching retirement age (currently 60 years), employees can withdraw 60% of the corpus as a lump sum, with 40% mandatorily used to purchase an annuity for a regular pension.

    • Early exit before the age of 60 is permitted under certain conditions, with different withdrawal rules.

Research Allowance

You will have to submit receipts that were typically not reimbursed by the company under Continuing Education Allowance. The onus lies on the individual taxpayer to not submit the receipts twice (after getting it reimbursed by the company and then again submitting it under POI)
You can add any professional certificate along with the proof of payment, paid by you that was used towards the benefit of the company/job role.

Phone and Internet Allowance

As we have introduced the Phone and Internet component of INR 30000 per annum for tax-saving purposes. This allowance is a part of your CTC, and you can avail of the tax benefit by opting for it. To avail of the tax benefit, you must declare an annual amount in the section “Other allowance details” during IT declaration.

Only postpaid bills in team members’ names will be considered proof of investments at the end of the financial year. Tax exemption can be granted only on Itemized bills. Since prepaid connections do not have monthly bills, you will not be able to claim them.

Previous Employment Tax Details

  • You can submit the Full and Final settlement and duly verified by the employee and by the previous employers OR

  • Tax computation sheet and duly verified by the employee and by the previous employers OR

  • Form 12B and duly verified by the employee and by the previous employers.

Submit Investment Proofs to Zoho

Kindly refer to the following document on how to submit proofs within Zoho.

Disclaimer:

We are not considering the Donations for taxation; hence employees have to consider the same at the time of filing their personal returns and have to claim the tax refund.

References:

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