Income Tax Declaration Submission for Salaried Employees: Format & Process

The process of income tax declaration for employees involves informing their employer about various aspects of their income and tax-saving investments made during a fiscal year. This declaration helps employers calculate the correct amount of Tax Deducted at Source (TDS) from the employee’s salary. This article provides an overview of the declaration process, including Form 2BB submission, the significance of tax declaration, and verification of supporting documents. It also discusses common tax-saving investments and the declaration format for opting the old or new tax regime, empowering employees to make informed decisions about their taxes.

Here’s a brief overview of the key points regarding income tax declaration:

• Form 2BB: Employees submit this form to declare their tax-saving investments or expenses made during the financial year to reduce their tax liability.
• Importance of Tax Declaration: It allows employers to deduct the correct amount of income tax from the employee’s salary based on the estimated income and declared investments.
• Verification of Supporting Documents: Employers usually set a cut-off date for submission of investment or expense proof, often in January or February, to ensure any tax shortfall can be recovered in the remaining months of the financial year.
• Income Tax Investment Proof: This is a document that provides evidence of the investments made by an individual to lower their taxable income and, consequently, their tax obligation.

For a detailed walkthrough of the tax declaration process for employers and employees, you might find the article “Tax Declaration: A Walkthrough for Employers and Employees” helpful. It explains the significance of tax declaration, how to verify supporting documents, and the mode and time of submission. Additionally, it discusses the impact of the new tax regime introduced in the Union Budget 2020, which offers lower tax slabs with fewer exemptions and deductions. Employees can compare and choose the regime that is more beneficial for them based on their income.

Here are some common tax-saving investments in India that can help reduce your taxable income:

• Equity-Linked Savings Scheme (ELSS): ELSS funds offer tax savings under Section 80C and the potential for high returns through equity investments.
• Public Provident Fund (PPF): A government-backed savings scheme known for its safety and tax benefits.
• National Pension System (NPS): A retirement savings plan that allows for tax deductions under Section 80CCD (2) for employer contributions1.
• National Savings Certificate (NSC): A fixed income investment scheme that you can open with any post office and is a tax-saving instrument under Section 80C.
• Unit-Linked Insurance Plan (ULIP): An investment product that combines life insurance with investment options and offers tax benefits.
• Sukanya Samriddhi Yojana (SSY): A government-backed savings scheme aimed at the betterment of girl children, offering tax benefits under Section 80C.

These investments not only help in saving taxes but also encourage long-term savings and financial planning. It’s important to choose the right investment based on your financial goals, risk appetite, and investment horizon.

Conclusion: Effective income tax declaration is essential for both employers and employees to ensure accurate tax deductions and compliance with regulations. Understanding the declaration process and common tax-saving investments enables employees to optimize their tax liabilities while planning for their financial future. By following the provided declaration format, employees can choose between the old and new tax regimes based on their individual circumstances, thereby maximizing their tax savings and financial well-being.

FORMAT OF EMPLOYEE’S INCOME TAX OPTION CUM DECLARATION FORM FOR THE FINANCIAL YEAR 2024-25 (PERIOD FROM 01-04-2024 TO 31.03.2025)

(STATEMENT SHOWING PARTICULARS OF CLAIMS BY AN EMPLOYEE FOR DEDUCTION OF TAX UNDER SECTION 192B AS REQUIRED AS PER FORM 12BB)

To,

HR & Admin
XYZ Pvt Ltd
________,
________,

Subject: Declaration u/s 115BAC for opting old tax regime/ new tax regime under Income tax act

for computation of TDS on salary.

Dear HR Pay roll,

I_________________________________ (Name of employee) hereby declare that I want to opt for___________ (old tax regime/ new tax regime) under Income tax act for computation of TDS on salary. I also know that if I opt for new tax regime than I will have to forgo all the deduction under the Income tax act and pay taxes as per the new slab rates notified by the Finance act 2021. Whereas if I opt for old tax regime than I will have get benefit of all the deduction under the Income tax act and pay taxes as per the old slab rates notified by the Finance act 2019.

Please consider this declaration and calculate and deduct the TDS.

Yours sincerely,

(Name of employee)

(Signature)