Save TDS in January: Required Investment Proofs and Documents

What is Form 12BB?

 

Form 12BB is the official form used to support investment declarations made by an individual. Salaried individuals need to fill in the details of their investments in Form 12BB and attach supporting documents that prove these investments. Based on this declaration and supporting documents, the concerned authority adjusts the TDS and displays the final income tax amount payable by the individual.

At the start of a financial year, individuals share their investment plans for the year with their employers. Accordingly, the deductor deducts TDS before making the payment. It is submitted usually during the first few months of the fiscal year. However, it is not compulsory to make exact investments as declared. At the end of the fiscal year, around December to January, individuals need to submit Form 12BB along with investment proofs. This is the final submission based on which, the TDS is adjusted and tax payment is done.

Saving TDS: Investment proofs required

 

TDS is deducted from the salary of an individual whenever the payment is made. So, it is essential that you plan your financial year smartly to avoid excessive TDS deductions and to increase your in-hand salary.

Some of the smart investments that can help you save TDS are:

1. Leave travel allowance (LTA)

   Salaried individuals are usually eligible for LTA claims. It is permitted twice in a 4-year block. The current block is 2022-25). You must note that LTA is only available for domestic travel and not international trips.
   

   If you are willing to claim LTA in your investment declaration, the following documents need to be submitted to prove it:
   

   • Invoices from the travel agent
   • Fare receipts of flight, bus, train taxi, etc.

2. House rent allowance (HRA)

   House rent allowance may be a part of the CTC (Cost-To-Company) of a salaried individual. As not everyone is eligible for HRA, you must confirm the same before mentioning it in your investment declaration.
   

   If an employee is eligible for HRA and lives in a rented home, they can claim HRA in Form 12BB. The following documents must be submitted:
   

   • PAN details of the homeowner (if rent exceeds ₹1 lakh)
   • Name and address of the homeowner
   • Agreement paper and receipts of the monthly rent.

3. Note:Section 80GG of the Income Tax Act of 1961 lets you claim a tax deduction on rent paid even if you are ineligible for HRA. To claim Section 80GG, the rent must be over ₹3,000.
   

4. Section 80C, 80D, 80CCC, 80CCD, 80G

   Purchase of life insurance or health insurance, investments, and donations made are also eligible for tax deductions.
   

   • 80D -

     Deductions under section 80D are available for premiums paid for health insurance, preventive health checkups, Contributions to the Central Government Health Scheme or other notified schemes subject to the terms and conditions prescribed in the Act.
     

     Health insurance premium up to Rs 25,000 for self , parents , spouse , dependent children are eligible for deductions and it is up to Rs 50,000 if the family or parents are senior citizens i.e. 60 years or above .
     

     Preventive health check-ups up to Rs 5,000 can be claimed for yourself, your spouse, dependent children, and parents .
     

     A tax deduction of up to ₹25,000 for contributions to the Central Government Health Scheme or other notified schemes can be claimed , subject to terms and conditions prescribed in the Act.
     

   • 80C and 80CCC and 80CCD-

     Life insurance premiums paid up to ₹1.5 lakhs can be claimed under Section 80C of the Income Tax Act of 1961. This deduction includes section 80CCC, which covers payments made towards pension funds. Section 80CCD(1) covers the payment made towards the Atal Pension Yojana or other government pension schemes.
     

   • 80G-

     Section 80G of the Income Tax Act of 1961 lets you claim donations made in a fiscal year. It must be paid through cheque or demand draft. Cash is only allowed if the donation is less than ₹2,000. Specified donations are eligible for 50-100% deductions.
     

   • Under Chapter VI-A of the Income Tax Act of 1961, you can raise the following claims along with supporting documents to claim TDS deductions:
   • Public provident fund
   • ELSS mutual funds
   • Life insurance policy
   • Tax-saving FDS
   • National Savings Certificate (NSC)
   • Children's tuition fees
   • Post office term deposit
   • Preventive health check-ups
   • Medical expenses (handicapped dependents)
   • Higher education loan interest
   • Section 80U for disability claim.

5. Interest on home loans

   Individuals who borrow loans to build, rebuild, repair, buy, or renovate a home can claim interest deductions under Section 24 of the Income Tax Act of 1961. The interest on a home loan is eligible for deductions.
   

   To claim this in your investment declaration, the following documents may be required:
   

   • Details of the lender (name, address, and PAN/ Aadhaar number)
   • Proof of the home loan interest payment.

Conclusion

 

An investment declaration made at the end of the financial year is quintessential when it comes to financial planning. On the one hand, it reduces your tax burden and on the other hand, it increases your take-home salary. So, make sure to keep a tab on important dates and submit Form 12BB and necessary documents within the deadline to claim maximum TDS deductions. Even in case excess tax is deducted, do not worry as you can claim it in income tax returns (ITR).

FAQs

 

1. Where do I have to submit investment proofs?

   You need to submit investment proofs along with Form 12BB to your employer.
   

2. What are essential investment proofs that I need to submit?

   The investment proof documents you need to submit depend on the type of investment made in a fiscal year. PAN and Aadhaar cards may be mandatory, and along with these, you need to present investment documents as well. For instance, for LTA, you need to submit travel receipts.