Arnav Pandya
Salaried individuals often find themselves in a bind because some of their financial details have changed and they find that the tax that is deducted each month is actually higher than what it should be. One of the ways in which they can tackle the position is through the use of the investment declaration form as this would allow them to ensure that they have mentioned the right points to their employer who would take this into consideration and hence ensure that a lower amount of tax is actually deducted. Here is a closer look at the issue and what the individual can actually do.
Actual process
There is a certain amount of income that is earned by the employee and this is distributed under various heads. Depending upon the figures here plus the various tax saving investments that would be undertaken by the employee during the year the employer works out the annual tax liability and then ensures that the required amount of tax is deducted each month on the salary that is paid out. Thus there are two main factors that are at play here. One is the income amount and the heads under which this is received while the other is the investments that are actually done by the individual which will lead to the benefit of a lower tax for them.
Changes
The ideal situation for the individual taxpayer would be that the details of the investments and other processes that they do is available right at the start of the financial year so that these details are provided to the employer in the investment declaration form. This would ensure that the entire figure is considered by the employer right from day one and the maximum possible tax savings are considered in the workings and the action is taken accordingly. However this is not always the case as there might be some steps that happen in the middle of the year which might not have been present earlier. This could be something like a home loan taken after a few months from the start of the financial year so this might not have been present in the earlier workings but would now have to be included because the impact can be quite significant.
Prompt action
Whenever there is any such change that is actually witnessed then the individual should ensure that they transmit these details to their employer. This might require the filling in of the investment declaration form again with the updated details and giving of some other details that would help the employer in ensuring that the right amount of deduction is done on the tax front. The employee should ensure that they consider this aspect and finish this process because there is a need to ensure lower tax deduction and this opportunity should not be missed. If this is not done immediately then there could be a higher tax deduction which they would need to claim later from the tax department as refund.
Need
The need to ensure that there is some action taken on this front is important because this is to ensure that while the issue is still with the employer before the end of the financial year in terms of the amount of the tax deducted at source the right details are considered. If this chance is missed out then there would be a position where the individual would find that they have to take the refund from the government which can only be done when the return is to be filed and hence this will have a long time lag. This would mean that the amount involved during this time would not be recoverable but early action could lead to adjustments in future tax deductions during the year.
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