Few simple tips for Income tax filing

Rajiv Raj Creditvidya.com

Come January and human resource department of companies remind their employees to submit the proof of investments that would fetch the employees deduction under income tax act. Most large companies issue circulars in April seeking tentative investments that the employee intends to do and accordingly calculate the tax liability of each employee. The deduction of income tax from salary happen in the three last months of the financial year – January to March, after taking into account the actual investments as against what was planned in April. While we all are aware that traditional investments such as public provident fund, National Saving Certificate, Investments in tax saving bank fixed deposit fetch us deduction under section 80C of the income tax, one can also seek tax shelter by claiming his repayment of home loan principal. Under section 80 C of the Income Tax Act, 1961, a borrower can claim tax deduction of Rs 100,000 per year towards repayment of principal. She is also entitled to deduction up to Rs 150,000 towards the interest paid on home loan in a year under section 24 of the Income Tax Act, 1961, for each financial year. Though some of us know these tax saving benefits, some employees fail to inform their employers on time and end up seeing a tax deduction in their salary. The reason behind this failure is not getting the ‘home loan repayment statement’ for the purpose of tax in time. The best way out is to approach the bank as soon as possible and get the home loan statement in place. There are some banks that offer this home loan repayment statement on their web site. A borrower does not need access to Internet banking to get the statement. Without logging on to the web site of the bank, borrower can get his statement that clearly mentions the principal repayment and interest paid in a given financial year. Most such banks ask for some basic details such as home loan account number, date of birth of the primary borrower, EMI amount or the original loan amount disbursed or even the bank account number from which the EMI is paid. The borrower gets the statement with a click of a button the moment she keys in the aforementioned basic details. If you don’t have your statement now, visit the web site of the bank from which you have availed home loan. Most likely they must have introduced this facility. If you don’t find it, then call up the bank branch or visit the bank from where you have got the home loan. A point to note here is this statement is free of cost and getting it on time can save you a few thousands. If your employer deducts tax on your salary just because you do not submit your statement on time, you can claim an income tax refund at the time of filing income tax returns. But it means you have incurred an opportunity cost. Had the money stayed with you, you would have earned some money as interest on it. So be agile. Further repay your home loan on time and see to it that your credit score, popularly known as CIBIL score, remains intact, you can also keep your paperwork in place to get the income tax deduction on time.