(A) Salaried Tax Declaration
A salaried tax declaration is a document that an employee provides to their employer at the beginning of a financial year. It includes details about the employee’s income and investments, which the employer uses to calculate the employee’s tax liability and deduct the appropriate amount of tax from their salary each month.
The salaried tax declaration form usually includes information such as the employee’s basic salary, allowances, and deductions, as well as details about investments made in tax-saving instruments such as Provident Fund (PF), Public Provident Fund (PPF), National Pension System (NPS), and Life Insurance Premiums. Employees are required to fill out the salaried tax declaration form accurately and submit it to their employer within the specified deadline.
The salaried tax declaration form helps employers deduct the correct amount of tax from an employee’s salary each month and helps employees avoid underpayment of taxes or overpayment of taxes. It is an important document that ensures compliance with tax laws and helps individuals plan their tax liabilities effectively.
(B) Liability to file Salaried Tax Declaration in India
In India, all salaried employees are required to file a tax declaration with their employer at the beginning of each financial year. The declaration, known as Form 12BB, includes details about the employee’s income, investments, and tax-saving instruments.
The following information needs to be provided in the Form 12BB:
1. Basic salary
2. House Rent Allowance (HRA)
3. Leave Travel Allowance (LTA)
4. Medical Allowance
5. Any other allowances or perquisites received
6. Deductions under section 80C (Investments in PF, PPF, NSC, Life Insurance premium, etc.)
7. Deductions under section 80D (Medical Insurance premium)
8. Deductions under section 80G (Donations to charitable institutions)
9. Any other deductions claimed
Employees are required to provide accurate information in the Form 12BB and submit it to their employer within a specified deadline. Employers use this information to calculate the employee’s tax liability and deduct the appropriate amount of tax from their salary each month.
It is important to note that failure to submit the Form 12BB or providing incorrect information may result in penalties or legal action by the tax authorities. Therefore, it is essential for salaried employees in India to ensure that they file their tax declarations accurately and within the specified deadline.
(C) Tax Savings Investments available to the Salaried person in India
In India, salaried individuals have several tax-saving investment options that can help them reduce their tax liability. Some of the popular tax-saving investments available to salaried individuals in India are:
1. Employee Provident Fund (EPF): Contributions made to the EPF are eligible for tax deductions under Section 80C of the Income Tax Act, up to a maximum limit of Rs. 1.5 lakh per annum.
2. Public Provident Fund (PPF): Contributions made to the PPF are eligible for tax deductions under Section 80C, up to a maximum limit of Rs. 1.5 lakh per annum. Interest earned and maturity proceeds are also tax-free.
3. National Pension System (NPS): Contributions made to the NPS are eligible for tax deductions under Section 80CCD(1) of the Income Tax Act, up to a maximum limit of Rs. 1.5 lakh per annum. An additional deduction of up to Rs. 50,000 per annum is available under Section 80CCD(1B).
4. Equity-Linked Savings Scheme (ELSS): ELSS is a type of mutual fund that invests primarily in equity shares and offers tax benefits under Section 80C, up to a maximum limit of Rs. 1.5 lakh per annum.
5. Tax-Saving Fixed Deposits (FDs): Tax-Saving FDs offered by banks are eligible for tax deductions under Section 80C, up to a maximum limit of Rs. 1.5 lakh per annum. The lock-in period for these FDs is five years.
6. Life Insurance Premiums: Premiums paid towards life insurance policies are eligible for tax deductions under Section 80C, up to a maximum limit of Rs. 1.5 lakh per annum.
7. Sukanya Samriddhi Yojana (SSY): This is a government scheme aimed at providing financial security to the girl child. Contributions made to the SSY account are eligible for tax deductions under Section 80C, up to a maximum limit of Rs. 1.5 lakh per annum.
It is important to note that the tax-saving investment options available to salaried individuals may change from time to time. Therefore, it is advisable to consult a tax professional or financial advisor for specific information and guidance on tax-saving investments in India.
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