Couldn't submit investment proofs? Don't fret

Did the End of Season sale disrupt your plan to save for taxes during January 2015?

Did you forget to submit the systematic investment plan and the provident fund cheque again during the first nine months of the financial year? Stop worrying about the loss of tax benefits, now that you couldn't submit the proofs to your company's accounts department.

Though the last minute tax-saving investment decisions would mean that a bulk of your February and March salary would be guzzled by taxes, you can still claim some of these back later.
The non-submission of investment proofs to the employer by the January-February deadline wouldn't nullify the tax benefit, except under a couple of exemptions, provided you have made the investments before the financial year ends on March 31, 2015.

Deductions under the Sections 80 C, 80 D (heath insurance and check-ups), 80 G (donations) can be claimed for investing in instruments such as life insurance, tax-saving mutual funds and fixed deposits, housing loan, investment into bonds, provident fund. Expenses such as tuition-fee payment of children, purchase of health insurance or undergoing medical check-ups too can be claimed.

This essentially means you can make the investments even after your employer's deadline for investment-proof submission has passed. But additional taxes would be cut as a result of non-submission of proofs and you will have to claim these back as refunds.

However, if you fail to make the investments before the investment-proof-submission deadline then the Form 16 you receive from the employer would not carry the details of the investments as you failed to submit the proofs. You need to enter the investment details in the Income Tax returns form and accordingly file for refunds in the applicable column. There is no requirement to submit investment proofs at the time of tax filing.

Though investment-related tax benefits can be claimed even after the investment-proofs deadline has culminated, certain expense-related tax deductions can be claimed only at the employer level and would nullify if not mentioned in the Form 16.

Take for instance the exemptions for leave travel allowance (LTA) and the medical expense reimbursement. Employer's need to preserve the bills and documents before granting the tax benefit on LTA and hence if you fail to submit these proofs, you will have to bear the tax brunt. But LTA can be claimed twice in a block of four years and the present block is 2014-18. So you can either carry forward this benefit next year or claim exemption for fresh travel next year.

Medical expenses incurred on self and eligible family members is exempt up to Rs 15,000, provided you show proofs. If you failed to submit these medical reimbursement bills then the income would be taxable as the benefit is available only at the withholding stage.

For all the other deductions you can claim a refund if excessive taxes have been paid. With the income tax department using technology, the turnaround time for refunds has shrunk to an average of three months in most cases according to the Central Board of Direct Taxes. One must preserve the investment proofs for this year at least until September 2016, as they can be presented if a scrutiny is called for.

But investment decisions are best made at the start of the year, when panic doesn't drive your investment choice. Also, you get returns on the investment throughout the year, like in case of PPF, which can help you build a higher corpus thanks to better compounding.

Planning ahead for the next year would help you avoid the hassle of claiming income tax refunds. For the present two months, you will have to budget your expenses in line with your tax-axed income.