Income tax Proofs

Salaried employees vouching policy

Prepared by Greenpay Outsourcing Services Pvt Ltd

20/11/2019

This document contains the proofs that employees need to submit to the employer to avoid
higher deduction in the Income tax from employee salary
Objective

This document has been prepared to help employees to understand the lists of proofs that can be
submitted to claim Income tax exemption and deductions. The Income Tax deductions and
exemptions are governed by Income Tax Rules stated by the Government of India.

The employer is liable to deduct the Income tax from employees during his/her service at the
Organization. The employer will validate the documents submitted by employees for checking the
authenticity and genuineness of the documents.

Important note: - Rejection of Investment Proofs will lead to higher rate of Income tax deduction in the
salary.

1. House Rent Receipt Sec 10(13A)

➢ One rent receipt is enough for each quarter for the period of April 2019 to December
2019.
➢ A rent declaration copy should be submitted for January’20 to March’20.
➢ If there is any change in the rent during the mid of the Financial year 2019-20, then for
the respective month rent receipt should be submitted.
➢ The Rent receipt should mandatorily have the residential address, date of payment of
rent and the landlords’ signature
➢ If the rent is more than 1,00,000/- per annum then the Landlord’s PAN card copy is
mandatory, (Landlord PAN number and Landlord Name is mandatorily needed to be
shown while filling the Form 24Q returns)
➢ Important Note: - Employees paying a rent of more than INR 50000 Per month
If an employee is paying a rent of more than INR 50000/- per month, then the employee needs
to deduct 5% TDS while paying rent to the landlord. If the landlord doesn’t have a PAN number
then 20% TDS is to be deducted. The deducted Income tax should be paid under section 194-IB
of the I.T. Act and the employee needs to upload Form 26C on the TIN website for which the
tenant is not required to obtain TAN. Within 15 days of uploading Form No.26C, the employee
needs to issue Form 16C to the landlord from TRACES website. (This activity is not under the
scope of Payroll service provider or Employer) this is a purely an employee (Individual) scope.

For Detail procedure refer FAQ the URL Link: -

https://www.tin-nsdl.com/faqs/tds-on-rent-of-property/TDS-FAQ.html

2. Income from House property Sec 24(b)

➢ Employees can claim both the HRA and Interest on Housing loan exemption if both the
House property & Rented house are in the same Cities as below

Mr./ Ms. X is in a rented house from April’19 to Dec’19 and shifted to their own house
effective from Jan’20 in this scenario Mr./Ms. X can claim to HRA exemption from April’19
to December’19 and Housing loan Interest can be considered during the financial year
2019-20.
 Mr./Ms. Y is in a rented house from April’19 to March ’20 and the interest on house
property is let-out during the financial year 2019-20.

➢ To avail this exemption, the construction of the house should be fully complete and ready
to occupy before 31st March 2020. Need copy of possession certificate or electricity bill or
self-declaration along with Provisional loan Statement.

➢ A copy of the Bank Provisional Statement or LIC HFL statement or Other Government
recognized Financial organization funded towards Housing loan statement is required for
the Current Financial year 2019-20 (In which it should be clearly mentioned about the
PAN Number of the Bank, Loan type, Breakup of Principal & Interest amount which
is paid / payable during the Financial Year)

➢ A maximum of two houses can be treated as self-occupied. More than two houses should
be treated as let-out property.

➢ Maximum Interest on housing loan exemption for both self-occupied and let-out property
is INR 2,00,000. Refer to the let out working as below:

Let-out property computation (Example)

Rent received from the tenant - 180000 Per annum
Less Municipal Tax - 6000 Per annum
---------------
Net Annual Value (NAV) - 174000
Less Deduction under sec 24
Standard deduction 30% on NAV- 52200
Interest borrowed for FY-2019-20 200000
----------------------
Income from House property- -78200
----------------------

➢ Loan taken on purchase of Site / Plot / Farm land is not eligible for Interest on housing
loan exemption

➢ House property loan is taken under joint names, 50% will be considered for exemption. In
case employee wants to claim 100% exemption, then he/she should submit the
declaration clearly stating that Co-applicant is not claiming the tax benefit after duly
signed by both. (Format attached for both Self-Occupied and Let-out property)

➢ Any pre-EMI interest paid before completion of construction of the house can be claimed
over a period of 5 years by equally dividing into 5 instalments.

➢ While claiming the interest on the housing loan, it’s mandatory for the employee to
mention the PAN Number of the lender i.e. (Bank, Financial institution and Others) in
the Remarks column of the investment declaration page online and the same PAN
Number needs to be mentioned on the copies of proof that are being submitted by the
employee.

➢ Employee fails to provide the PAN Number of the lender (Bank, Financial Institution and
others) those proofs will be rejected or disallowed, and the employee will not get HRA
exemption benefit.
3. Deduction under Chapter VIA

• Section 80C, 80CCC, (Maximum limit of deduction Rs.1,50,000/-)

➢ Life Insurance Policies for FY-2019-2020

o Proofs can be submitted for Self, Spouse, children. In case of HUF, any member
who is a part of the group can claim for Life Insurance.

o Photocopy of premium paid receipt or Annual statement should be produced as a

proof

o Premium is paid yearly and due date falls after the cut-off date of proofs
collection, then the employee needs to submit the declaration form along with the
previous year’s premium paid receipt

➢ Public provident fund for FY-2019-2020

o Proofs can be submitted for Self, Spouse and children

o Copy of the front page of the passbook, where there’s a clear mention of Public
provident fund account needs to be submitted

o Copy of the Challan paid in the regular intervals duly affixed seal and signature
by the Bank personnel

➢ National Saving certificates (NSC) for FY-2019-2020

o Copy of certificate needs to be submitted which is taken after 01st April 2019 and
allowed only for self

➢ Unit-linked Insurance plan (ULIP)

o Proofs can be submitted for self, spouse, children. In case of HUF, any member
who is a part of the group can claim for Life Insurance.
o Copy of the receipt or the statement for the financial year 2019-20

➢ Mutual Funds

o Copy of the receipt or the statement for the financial year 2019-20
o Qualified only for self. copy of the bond needs to be submitted

➢ Principal Housing loan

o Qualified only if the house is ready to be occupied

o Copy of the bank statement, LIC, any other Govt recognised document for the
financial year 2019-20 PAN Number of Bank, LIC or any Financial along with,
Loan type

o Copy of stamp duty and registration charges if any for FY -2019-20

➢ Tuition fees

o Qualified only for maximum of two children and it should be a full-time course
which includes play school, pre-nursery, nursery classes as well

o Copy of the tuition fees paid receipt for the financial year 2019-20

o Development fee, Donation fee & Capitation fees is not allowed rest all other fees
are allowed for the deduction

➢ Sukanya Samriddhi Account Scheme

o Deduction is allowed for Parent or Legal Guardian of the girl child, investment in
the name of the Girl child of an individual

o No deduction is allowed if the amount is deposited by a HUF

o Copy of the Sukanya Samriddhi Account Scheme certificate and paid receipt for
the financial year 2019-20

➢ Fixed Deposit / Post office Time Deposit / Senior citizen saving scheme

o The above deposits are qualified only if it is a minimum holding period of 5 years

o Copy of the fixed deposit certificate to be submitted for the financial year 2019-20

o Copy of front page of the passbook of post office savings where it clearly
mentions “5-year time deposit” along with the details of the amount paid for the
financial year 2019-20 (RD Account & KVP is not allowed for the Deductions)

o Copy of senior citizens saving scheme certificate

• Section 80CCD(1B) (Maximum limit of deduction INR 50,000/-)

➢ Deduction in respect of contribution to pension scheme (NPS)

o Proofs can be submitted only for Self

o Copy of NPS certificate taken in the FY-2019-20 and amount paid receipt
required

• Section 80D (Maximum limit of deduction INR 1,00,000/-)

➢ Medical Insurance Premium

o Copy of premium receipt along with the insurance copy

o For preventive health check-up, maximum of INR 5000/- is allowed for self,
spouse, children & dependent parents. Original health check-up receipts
required (Cash payment can the extent upto INR 5000/- only)

o Maximum exemption allowed for self, spouse & children is INR 25000/- which is
inclusive of preventive health check-up

o Further a deduction of INR 25000/- is allowed for dependant parents (not for
Father-in-law and Mother-in-law)
 o Medical expenditure bills are allowed up to INR 50,000 – Only if the parents are
Senior Citizens and Super Senior Citizens. If the medi-claim insurance is not paid
on the health of such person, any mode other than cash payment is accepted.

We need Original Medical expenditure bill in which it should clearly mentioned

the Patient Name, Age and date and mode of payment.

o If any Medical insurance premium is deducted through salary, it will be

considered for deduction and no proofs are required to submit.

• Section 80DD (Maximum limit of deduction INR 1,25,000/-)

➢ Medical Treatment for Handicapped dependent

o This will be applicable only for the dependants (spouse, children, parents,
brothers and sisters)

o In such a situation, dependent should not have claimed under Section 80U in the
previous year

o A deduction of INR 75,000/- is eligible. In case the disability is more than 80%
then maximum deduction allowed is up to INR 1,25,000/-

o A copy of the certificate issued by the Government medical authority to be

produced. In case the certificate has expired then a re-assessment is required,
where a fresh medical certificate needs to be submitted to continue the deduction
(Form-80DD attached)

o If dependent is suffering from autism, cerebral palsy then updated Form 80DD is
mandatory along with seal and signature of Government Doctor

o The original bills for actual expenditure incurred for medical treatment to be
produced or copy of paid/ deposits under any scheme of LIC/ other insurer for
maintenance of dependent is required

• Section 80DDB (Maximum limit of deduction INR 100,000/-)

➢ Medical Treatment for specified Diseases

o This will be applicable only for the dependents (spouse, children, parents,
brothers and sisters)

o Actual expenses incurred or INR 40,000/- whichever is lower. In case of senior

citizens, maximum allowance is INR 100,000/-
o Copy of age proof to be submitted for Senior citizens (PAN, Passport, Ration
card or Birth certificate)
o A certificate of Form 10-I to be furnished from any registered doctor who is
working in a Government Hospital (Form10I-80DDB attached)

o Amount received from the Insurance company or from the employer to be

specified in the form
o Original bills for Medical treatment to be produced along with doctor prescription
copy required
 o Specified Diseases are – AIDS, Cancer, Chronic Renal failure, Dementia,
Dystopia Musculorum Deformans, Motor neuron disease, Ataxia, Chorea,
Hemiballismus, Aphasia, Parkinson Disease, Full Blown, Haematological
disorders, Haemophilia & Thalassaemia.

• Section 80E (No limit)

➢ Interest on loan taken on Higher Education

o Copy of the Bank Provisional Statement towards Higher education loan is

required for the current Financial year 2019-20 (In which it should clearly
mention about the PAN Number of Bank, Loan type, interest amount which is
paid / payable during the Financial Year)

o Only interest amount is allowed for tax exemption.

o Higher education Loan can be taken for self, spouse and children after 10th Class
(SSLC)

• Section 80EE (50,000/-)

➢ Interest on loan taken for residential house property

o Loan has been sanctioned by the bank/ housing finance during 1st Apr 2016 to
31st Mar 2017

o The amount of loan sanctioned for residential house property does not exceed
INR 35 lakhs and value of property does not exceed INR 50 lakhs

o The employee does not own any residential house property on the date of loan
sanction

o Copy of the Bank Provisional Statement, LIC or any other Govt recognized
financial institution towards purchase of Residential house property for the FY-
2016-17 to FY 2019-20 (In which the PAN Number of Bank, Loan type,
sanctioned date should be clearly mentioned)

o Copy of the Form 16 (PART B) for the FY-2015-2016 is required mandatory

• Section 80EEA (150,000/-)

➢ Interest on loan taken for certain house property

o Not eligible to claim 80EEA if claimed under 80EE

o Loan has been sanctioned by the bank/ housing finance during 1st Apr 2019 to
31st Mar 2020

o The stamp duty value of residential house property does not exceed INR 45
lakhs

o The employee does not own any residential house property on the date of the
loan sanction

o Copy of the Bank Provisional Statement, LIC or any other Govt recognized
financial institution towards purchase of residential house property for the FY
 2019-20 (In which the PAN Number of Bank, Loan type, sanctioned date
should be clearly mentioned)

o Photocopy of the Form 16 (PART B) for the FY-2018-2019 is mandatory

• Section 80EEB (INR 150,000/-)

➢ Interest on loan taken for Purchase of Electric Vehicle

o Loan taken towards purchase of electric vehicle, where the lock-in period should
be 5 years

o Loan has been sanctioned by the bank or any financial institution during the
period of 1st Apr 2019 to 31st Mar 2020

o Copy of the Bank Provisional Statement towards purchase of Electric Vehicle for
the FY 2019-20 (In which it should clearly mention the PAN Number of Bank,
Loan type, sanctioned date)

• Section 80U (Maximum limit of deduction INR 1,25,000/-)

➢ Deduction under Person with disability

o This is applicable only for self

o Disability is at least 40% then deduction of up to INR 75,000/- is allowed. In case

the disability is more than 80% then maximum deduction is allowed up to INR
1,25,000/-

o A copy of certificate issued by the Government medical authority to be produced.

In case the certificate is expired then a re-assessment is required, where-in a
fresh medical certificate needs to be submitted to continue the deduction
(Certificate for Form-80U attached)

4. Previous Employer Details

o Form 12B duly signed by the employee along with the copy full and final
settlement tax computation for FY-2019-20 of previous employer

o Form 16 (Part A & B) or Salary Certificate for FY- 2019-20 (if available)

o The proofs which are submitted under Chapter VIA (80C, 80D, 80DD, 80DDB &
80E, 80EE,80EEA,80EEB and 80U) and Interest on housing loan if any. The
same needs to be re-submitted to current employer (Swiggy) for cross-verifying
and considering actual deductions

o Upon non-submission of previous employer income, the employee may be liable

to pay taxes while clubbing income of both the employers at the time of filing the
Income tax returns.

Important Note: - Kindly submit proper investment proofs at one shot on or before the cut-off
dates to avoid higher income tax deduction through salary