What is income tax declaration (ITD)?
It is always a good practice to do your tax planning at the beginning of a financial year. Because, sound planning helps you make the most of the tax exemptions and deductions available to you and, in turn, save taxes. Submitting your ITD is one such way. More on it in this article.
What is the income tax declaration (ITD)?
As per income tax laws, your employer is mandated to deduct TDS on your annual salary on a monthly basis. For this purpose, you are required to submit your Income Tax Declaration (ITD) with them. ITD is proof of expenses and investments you plan to make during a financial year. Typically, your employer will require you to declare such investments and expenses on their HR portal.
Consequences of not submitting ITD
When you don’t submit ITD, it means you don’t declare any expenses and investments, which inflates your income. Thus, your employer ends up deducting a higher TDS on your income. Meaning, they recover the shortfall in taxes from your salary in the following months.
When you don’t submit ITD, it means you don’t declare any expenses and investments, which inflates your income. Thus, your employer ends up deducting a higher TDS on your income. Meaning, they recover the shortfall in taxes from your salary in the following months.
In case your employer deducts excess TDS in a financial year, you can claim a refund by filing your ITR.
- Your name
- Your address
- Your PAN
- Financial year
- Eligible expenses
- Eligible investments
- House Rent Allowance
- Interest payable on loan
- Leave Travel Allowance to be claimed
- Investments and expenses eligible for deduction under Section 80C, 80CCC, 80CCD, 80E, 80G, 80TTA, 80D
- Other incomes such as rent and interest
Your employer sets a cut-off date within which you are required to submit your ITD.
After submitting your ITD, you are required to submit a documentary proof for your declaration. These include receipts and loan certificates.
The deadline to submit the proof of expense or investment generally falls between Jan and Feb. In addition, you are also required to submit Form 12BB.
In case you don’t have a documentary proof for your declaration, you are required to claim a refund in your income tax return (ITR). However, your ITR has higher chances of attracting scrutiny.
What is Form 12BB?
Form 12BB is a statement you need to submit to claim tax deductions, tax benefits, and or rebates on investments and expenses that you make through a financial year. The form is to be submitted at the end of the financial year. In addition, you are also required to furnish documentary proof of such expenses and investments at the end of the year.
Originally published at https://blog.tickertape.in on February 11, 2021.
