If you are a salaried individual, you must have noticed that the company is suddenly hell-bent into forcing you to submit certain documents at the end of the financial year. Also, before the start of the financial year, the company tells you to declare your investments in order to avoid any income tax deductions. The documents of these particular investments are necessary as they serve as a proof to the employer that you have made certain investments so that, in return, the employer does not deduct any or excess Tax Deducted at Source (TDS).
So what is TDS, TDS Rates and TDS Refund?
Every company deducts tax from your salary which has to be paid to the government as Tax Deducted at Source (TDS). This amount is determined by the TDS rates or TDS Refund incase the amount paid is in excess.
TDS Rates
TDS rates are dependent on your taxable income. The TDS rates are applicable to general taxpayers, both men and women. You can check the following table below to know more about the TDS rates applicable to you for FY 2017-18.
Income Bracket (INR) TDS Rates (%)
0 - 2,50,000 - Nil
2,50,000 - 5,00,000 - 5
5,00,000 - 10,00,000 - 20
10,00,000 + 30
Therefore, it is very important that you submit the documentary evidence of your investment declaration in order to claim tax deductions before your TDS rates are determined. If you do not submit proofs on time, excess TDS will be cut from your salary in March. The amount will only get refunded by the Income Tax Department once the tax cycle is over. This is known as a TDS refund.
TDS Refund
A TDS refund occurs when your investment declaration mismatches from the total tax deducted at the end of a financial year, this means that you have paid more than you are liable for. Since the amount has already been deducted by your employer, the only way to get back this extra tax is to file your income tax return. The sooner you file your ITR, the faster the TDS refund is processed. So don’t forget to apply for a TDS refund if the above mentioned situation occurs with respect to your income tax!
As a whole, TDS, TDS rates and TDS refund comes under Section 192 of the Income Tax Act, 1961.
Let us look at some of the tax saving instruments for which you can claim deductions with respect to tds rates and TDS Refund.
Section 80C
Under Section 80C of the Income Tax Act, there are certain instruments which entitle you tax saving benefits of up to INR. 1.5 lakhs. Eligible investments under this section include Equity Linked Savings Scheme (mutual fund), a Public Provident Fund (PPF) or premiums paid on life insurance plans, etc.
The best part about the various plans mentioned above is that their documentation is easily available online. In fact, for mutual funds, you get an entire consolidated report just like your bank statement. For Sukanya Samriddhi Scheme or the five-year tax saver Fixed Deposit (FD), you will have to submit the certificate from the bank or the deposit receipt.
Tuition Expenses
If you are still studying while working and earning a salary, you can submit the photocopies of the acknowledgment slip received post payment of the University fee. Make sure that the acknowledgement slip contains the exact fee amount along with the University’s seal and an authorised signature.
HRA - House Rent Allowance
If you live on rent, you can claim a House Rent Allowance exemption. For this, you will have to submit details of your rental address, landlord’s credentials and the amount of rent paid. You can either submit monthly rent receipts or an annual rent agreement statement. If you pay rent of more than INR. 1 lakh, it is mandatory for you to submit the landlord’s Permanent Account Number (PAN).
Note: You cannot claim HRA for more than one house.
Health Insurance
As per Section 80D, if you have invested in a health insurance for yourself or your wife and kids, you can claim a deduction of INR. 25,000. If your parents are senior citizens, the maximum allowable tax deduction is INR. 30,000 a year. All you need to submit is an insurance policy document stating that you have paid the premium.
Housing Loan
Firs, you need a certificate for your bank showing the principal paid on the home loan from April 2017 to March 2018. Then, you need to ensure that the bank mentions the provisional amount for the last 2-3 months of the current financial year as home loan EMIs (equated monthly installments) may be pending.
If you have taken a housing loan in FY 2016-17 as a first-time buyer, an additional interest deduction of INR. 50,000 under Section 80EE can be claimed. This deduction can be claimed every year starting from FY 2016-17 and subsequent years until the loan is repaid.
National or New Pension Scheme (NPS)
If you have invested INR. 50,000 in NPS on your own to claim a tax deduction under Section 80CCD(1B), then you will have to submit the copies of your PRAN (Permanent Retirement Account Number) and the NPS Transaction Statement for the Tier 1 Account. If the investment is made directly through your salaried account through the Corporate Model or Employee Mode, you do not have to submit any documents as proof of investment.
Once you have identified all the deductions which can be claimed by you, it is better to submit the documents for the same on time as any delay can result in extra TDS.
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