While the Government of India taxes you on your income, it also offers deductions and exemptions that allow you to cut down on your taxable income. Investments made to avail of these exemptions typically will give you some documentary evidence against them. This is what is usually referred to as ‘investment proof documents’. You need to submit these documents when you are filing your income tax returns to act as supporting evidence against the claimed deductions.

Let’s find out what these are and why they are important.

What are proof of income tax investments?

‘Investment proof documents’ usually refers to the documents that show details of your tax-saving investments. These include where, how much and when you have invested your money. When filing your income tax return, you need to submit these documents to verify your investments. Once reviewed by the tax authorities, you will be allowed to claim eligible deductions and receive an income tax refund, if applicable.

Some examples of proof of investment include receipts of insurance premium payment, certain types of equity mutual fund investments, home loan repayments and other tax-saving instruments.

Why are investment proof documents important?

Investment proof documents are essential for reducing your taxable income and ensuring you do not overpay on taxes. Without these documents, you may end up paying more tax than necessary. These proofs allow you to claim deductions that lower your taxable income. The difference can be refunded to you if any excess tax is paid.

Suppose your employer has deducted more tax than needed, or you have already paid more TDS and TCS than your total tax liability. In that case, these proofs allow you to claim a refund and ensure you only pay what is accurate based on your eligible investments.

Steps to simplify your investment proof submission

Below is a streamlined guide for taxpayers on how to submit documents required for investment proof:

Investment Declaration Process

It is important to declare all your investments to your employer to ensure no excess tax is deducted. Employers usually collect investment proofs and tax-related documents from employees between December and January. Submitting these proofs within the specified timeframe will ensure that accurate adjustments are made to your taxable income.

Submit the tax declaration proofs on time

Delayed submission of investment proofs can result in excess Tax Deducted at Source (TDS). In this case, you will be charged a higher tax rate depending on your overall taxable income for the year. So, you must ensure that you submit your proofs on time.

Submission of investment proofs during tax filing is non-compulsory

While you do not need to submit all investment proofs when filing your income tax return, it is important to keep a copy of these documents for any potential future audit or verification by the tax authorities.

Declaring planned investments for February and March

In many cases, you may not have made any investments throughout the year but plan to do so in February or March before the financial year ends. In this case, you must fill out a declaration form and submit it to your employer. This can help your employer calculate your tax liabilities based on the investments you intend to make by the end of the financial year.

Types of Documents that act as proof of Investment

Below is a list of investment proofs that can help you claim deductions under various sections of The Income Tax Act, 1961:

Home loan documents

The repayments towards a home loan qualify for a deduction under Sections 24(b), 80C and 80EEA. However, in order to claim these, you must include the loan sanction letter, interest certificate, stamp duty and registration receipts and property documents.

ELSS Mutual Fund statements

The Equity Linked Savings Scheme (ELSS) is the only mutual fund scheme that qualifies for deductions under Section 80C. You must submit your investment statements as proof to claim this deduction.

Public Provident Fund (PPF)

You can submit bank statements or a copy of your passbook to show your PPF contributions in a financial year and claim deductions under Section 80C.

Life insurance policy

The premium paid towards life insurance policies is also eligible for a deduction under Section 80C. However, you need to provide the policy document, policy premium receipts and other relevant documents.

House Rent Allowance (HRA)

If you live in a rented accommodation, you can claim a tax exemption on the rent under Section 10(13A) by submitting proofs, such as rent receipts, a copy of the rental agreements and the Permanent Account Number (PAN) of the landlord.

National Savings Certificate (NSC)

Investments made towards the NSC are eligible for a deduction under Section 80C. You must submit the NSC purchase certificates to claim deductions on your investment.

Tax-saving Fixed Deposits (FDs)

It is important to note that only five-year FDs qualify for a deduction under Section 80C. You can submit deposit receipts or bank statements to claim this deduction.

Tuition fees of children

Under Section 80C, parents can claim deduction benefits for tuition fees paid for their children’s education. You need to submit proofs like school receipts or bank statements to qualify for the deduction.

Post Office Term Deposit

Investment proof documents like account statements or receipts can be provided to claim a deduction on a post office term deposit under Section 80C.

Preventive health check-up bills (Section 80D)

Under Section 80D, individuals can claim a deduction of up to ₹ 5,000 for expenses incurred on preventive health-related check-ups. It is advisable to retain the medical bills and receipts as supporting documents to claim this deduction.

Medical expenses under Section 80DD

Section 80DD offers deductions for expenses incurred on the care of a disabled dependent, with deductions of ₹ 75,000 for 40% to 80% disability and ₹ 1,25,000 for 80% or more.

The required documents to claim this deduction include a medical certificate verifying the disability, Form 10-IA (for cerebral palsy, autism or multiple disabilities), and a self-declaration of expenses for nursing, medical care and rehabilitation. While a self-declaration usually suffices, you must also retain receipts for any insurance premiums claimed for the dependent.

Interest paid on higher education loan

Section 80E allows a deduction on the interest paid on education loans for higher studies, whether in India or abroad, with no maximum limit for claiming the deduction. The deduction is available solely on the interest paid, not on the principal. You can submit your education loan documents to claim this deduction.

Home loan documents for first-time buyers (Section 80EEA)

Under Section 80EEA, taxpayers can claim a deduction for the interest paid on a housing loan used to acquire a residential house. However, this section does not cover loans taken for the construction of a residential property. To claim the deduction, you must submit the loan sanction letter, interest certificate and property-related documents as proof.

Deduction claims for disabled individuals (Section 80U)

Under Section 80U, individuals with a certified disability of at least 40% are eligible for a deduction on their income. To claim this deduction, you must submit a medical certificate indicating the disability, as per Section 139. Qualified medical authorities, such as a neurologist with a Doctor of Medicine (MD) in neurology, a paediatric neurologist for children, a civil surgeon or a chief medical officer in a government hospital must issue the certificate.

Donations under Section 80G

Section 80G allows you to claim a deduction for donations made to approved trusts, funds and charities. To claim this deduction, you must have a duly stamped receipt issued by the charity or trust confirming the donation. Additionally, you also need to submit the registration number of the trust assigned by the Income Tax Department to validate the donation.

Essential tips for tax-saving investment

Here are some essential tips for improving your tax planning:

• You must start early in the financial year, so you are not burdened in February and March with the need to invest large sums to lower your taxable income. This can be stressful and lead to financial constraints in these months
• You must select investments that fit your financial goals while also serving the purpose of tax savings
• You must submit all proofs and declarations to your employer to ensure you do not pay excess tax
• You must maintain copies of all your investment documents to ensure compliance with tax laws
• You must file your returns on time to receive your income tax refund

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