Show ’em evidence and they will give you rebate

The due date of filing the individual tax return is approaching fast. Many deductions are available to taxpayers to save tax. It is important that the taxpayer have the requisite documentary evidence / proof in relation to these deductions even though the new forms are annexure less and no computations or other documentary proof are to be attached with the return. Presented below is the required documentation for each kind of deduction.

Deduction for interest on housing loan

An individual can claim deduction for interest paid on housing loan u/s 24 of the Act. The employee should furnish to the employer the details of his loan agreement and the certificate issued by the bank in respect of interest paid/payable during a particular financial year. The original interest certificate for each tax year should be preserved.

Tax deduction for investments

Perhaps the most popular deduction amongst the individual tax payers is deduction u/s 80 C / 80CCC of the Act. The popular investment options and the documentary evidence to substantiate the claim for deduction include the following:

Provident Fund / Superannuation Fund: Form 16 (Certificate for tax deducted at source) issued by the employer specifying the amount paid and the deduction allowed

National Saving Certificates (NSC): The NSC and a photocopy of the same after the maturity

Life Insurance Premium: Premium receipt & life insurance policy

Fixed Deposits for five years or more with a scheduled bank: Fixed Deposit certificate / copy of the same after the maturity

Repayment of the principal amount of housing loan-loan agreement and certificate of principal repayment issued by the bank / housing loan company
Sum paid as tuition fees for the purpose of full-time education of any two children of the individual. The original receipt issued by the school, college or university in India.

n Sum paid as contribution to annuity plan of LIC or other insurance companies for receiving pension: Premium receipt and the annuity policy

Medical insurance premium

A deduction can be claimed u/s 80D for the premium paid towards medical insurance for the tax payer, his spouse, dependent parents, and dependent children up to the limits specified. The policy document and the premium receipt should be preserved for future reference.

Interest on higher education loan

A deduction can be claimed u/s 80 E for interest on loan taken from banks / other specified financial institutions / approved charitable institutions for the higher education of the tax payer. Higher education has been specifically defined in this section. With effect from financial year 2007-08, the above deduction can be claimed for interest paid on loan for the higher education of tax payer, spouse and children.

The tax payer should maintain the loan agreement with the bank, the records of interest paid in the form of annual certificates/confirmation from the bank, records of admission into the specified graduate/PG courses, payments made to the educational institution to substantiate his claim.

Deduction for charity donations

An individual may claim deduction u/s 80 G subject to certain conditions / limits in respect of donations made to eligible institutions. Some donations are eligible for 100% deduction while others are eligible for 50%. The tax authorities issue an annual circular in respect of tax deduction at source (TDS) on salary payments. In this circular they specify few of the donations like PM’s Relief Fund etc. which may be considered by the employer and deductions allowed while computing tax on salary. The employee should submit the proof of donation made to his employer to claim such deduction.

In respect of donations that are not specified in the annual TDS circular, the deduction can be claimed in the tax return. Accordingly, the donation receipt should be maintained by the tax payer for future reference. It should be ensured that the donation receipt states that such donation is eligible for deduction under the above section.

Exemption for house rent allowance
An employee can claim exemption for the rent paid by him against the house rent allowance granted by his employer. The employee should furnish a copy of the lease agreement, copies of rent receipts containing details of rent paid etc. to his employer to claim this deduction. He should maintain these records in original.

Rent paid in absence of house rent allowance
A deduction may be claimed by an individual who is self employed or who is employed but who does not receive any house rent allowance from his employer. The deduction could be claimed for the expenditure incurred in excess of 10% of this total income on rent. In this connection, the copy of the lease deed, rent receipts, salary certificate/Form 16 should be maintained. Further, the tax payer may have to give a confirmation/declaration that his spouse/minor child do not own a house.