Income Tax Declaration is a document given by an employee to the employer which contains the employee’s gross income, expenses, and proof of tax-saving investments into instruments such as insurance, PF, annuity plans, etc. Taxation in India starts in IT declaration and ends with ITR filing.
The Income Tax declaration is generally submitted at the beginning of the financial year. IT declaration helps an employer to calculate the taxable income of an employee and the amount of tax to be deducted from the salary. An employee also needs to submit Form 12BB to the employer.
Once the TDS is deducted, the employer has to remit the same to the Income Tax department or Central Government via challan or online payment. The details are to be submitted to the Income Tax department every quarter.
Proof of Investment:
An investment proof is a document that proves an investment was made and provides the details of the investment. For the payroll and finance departments to calculate income tax, deduct TDS, and remit the remaining wages, investment proofs must be collected and verified. Tax deductions are claimed by the employees upon submitting proof of investment.
Frequently Asked Questions
What are the documents required for IT declaration?
The documents that are required for IT declaration:
- Aadhar and PAN card
- Form 16
- Salary slips
- Interest certificates from Post Office and Banks
- Tax-saving Investment Proofs
- Health Insurance Premium Receipts
- Proofs of Capital gains
Who is exempted from IT return?
The amendment removes the requirement for salaried individuals to file income tax returns if their taxable income is below Rs. 5 lakhs. Hence, individuals with an annual salary income under Rs. 5 lakhs and bank interest up to Rs. 10,000/- are exempt from filing tax returns.
What is the difference between an IT declaration and a Proof of Investment?
An IT declaration provides you with an estimate of the employee’s income tax. Proof of Investment wherein employees must provide the necessary documents at the end of each financial year as proof of investments.
What is the purpose of IT declaration?
An IT declaration is a document that employees use to report all the IT expenses and saving investments they have planned for that year in their payroll application.