INVESTMENT PROOF FOR TDS CALCULATION

INVESTMENT PROOF FOR TDS CALCULATION

TDS on salaries is calculated based on intent to investment declaration generally called as
“Investment Declaration” given by the employees at the beginning of the year and as revised
from time to time. However, most of the employers ask for actual proof of investment from
January, so that correct TDS can be calculated and the effect on TDS because of Declaration is
removed.

Following guidelines can be kept in mind for submitting proofs

House Rent Allowance

• The least of the following amount is exempt from income tax

o Actual HRA earned for the year
o Rent paid minus 10% of Basic + D.A.
o 40% of Basic + D.A. or 50% of Basic + D.A. (in case of Metro cities)

• Proof: Proof of occupation of the rented house for the period when the house is occupied.
Original monthly rent receipts from April 2008 till Jan 2009, and for Feb 2009 and March
2009, the original receipt to be given in respective months.

80D Medical Insurance

• Maximum deduction allowed is limited to Rs.15000 in case of Individual, Spouse &
Children

• Additional benefit of 15000 in case of mediclaim premium paid for policy of parents below
65 years and Rs. 20000 in case of parents above 65 years

• Proof: Photocopy of receipt issued by the Insurance Company. Receipts should be paid in
the current year only Policy can be in the name of individual, spouse, children or
dependant parents.

80E Interest on Education Loan

• Loan taken for pursuing higher education such as MBA, Engineering etc by employee /
children.

• Loan availed from banks or financial institution

• Actual interest paid by the employee is allowed as deduction, there is no limit for this
deduction.

• Interest paid for first 8 years only is eligible for deduction.

• Proof: Certificate from the Bank / Financial Institution specifying the following:
o The loan is an Educational Loan.
o Amount of Interest paid on the loan in the current year

Interest on Home Loan

• Loan taken on self occupied house property; Maximum Amount of deduction allowed is
Payment of Interest of Rs. 1,50,000.

• Loan taken on Let out Property No limit on Interest. Income from such property is also to
be considered.

• The benefit of deduction is applicable only after occupancy of the house and Pre-EMI
interest (EMI paid before occupation of the house) is deductible in 5 equal installments
starting from the year when the construction is completed or property is acquired.
• In case of jointly availed property loan, the employee to declare only the amount paid by
him/her.

• In case of self-occupied property, employee cannot claim both HRA exemption as well as
Loss from house property where the property is in the same city.

• Proof: Provisional certificate from the Housing Finance Company / Bank stating the
Following.

o The Amount of Interest to be paid during the Financial Year
o The Amount of Pre-EMI Interest paid

Section 80C deductions

• Maximum Deduction allowed is Rs.1.00 Lakh
• The investment proofs must be paid in the current financial year only

80CCC (Pension Policy)
• Policy from any approved company by IRDA.
• Late payment fees will not be considered as premium paid.
• Policy should be in the name of individual, spouse and children
• Proofs: Photocopy of all premium receipt issued by the Insurance Company

Life Insurance Premium
• Policy from any approved company by IRDA.
• Late payment fees will not be considered as premium paid.
• Policy should be in the name of individual, spouse and children
• Proof: Photocopy of all premium receipt issued by the Insurance Company

Public Provident Fund
• Provident fund can be in the name of individual, spouse and children.
• Maximum contribution allowed under this scheme is Rs. 70,000/-
• Proof: Photocopy of stamped challan or PPF passbook proving investment made

NSC Interest
• NSC interest declared will also be accounted as “Other Income” and taxed.
• Proof: Photocopy of all the certificates for which interest is being claimed and Calculation
of Interest

Fixed Deposit in a Scheduled Bank
• Term deposits for a minimum period of 5 years with a scheduled bank
• Proof: Photocopy of the Receipt/certificate issued by the scheduled bank

ULIP, Mutual Funds / ELSS, Infrastructure Bond, NSC, Postal Deposits
• Proof: Copies of Receipts / Statements / Bonds / Certificates issued by respective
authority / company proving investment made in the current year

Children Education fees
• Only amount mentioned as 'Tuition Fee' in the fee receipt will be considered for deduction.
• Receipts should be of the current year only (Apr'08Mar'09).
• Proof: Receipts issued by the school, college, university or educational institution.

Deposit under Senior Citizens Saving Scheme
• Amount deposited under senior citizen saving scheme only will be considered.
• Proof: Copy of Receipts of amount deposited proving the investment made in the current
year only

Five Yr Time Deposit Scheme in Post Office
• Time deposit for a period of 5 years with a post office is eligible for deduction.
• Proof: Copy of the Receipt/certificate issued by the Post office to be submitted

Housing Principal Repayment and Registration / Stamp Duty Payment
• Proof: Provisional Certificate from the Financial Institution/Bank stating the amount of
Principal Repayment.

• Photocopy of Sale Deed and Stamp Duty Paid Receipt to be attached

Other Points

• For systematic investment plans (SIP) in equity linked savings schemes, attach a
photocopy of the last statement

• A clear demarcation should be made between “investments made” and “investments to be
made.”

• Some investments are to be made at regular intervals e.g. Monthly payment life insurance
premium and SIPs. It is advisable to attach photocopies of the premium receipts you have
paid in March of the previous year to convince your finance & accounts department. While
attaching photocopies, mark forthcoming payments as 'investments to be made'.

• Remember to include details of medical insurance premium paid through credit card.