Investment Proof Submission? How does it help to save the tax?

As the financial year 2024-25 progresses, it's time for employees to submit their investment proofs for tax-saving investments made during the year.

What is Investment Proof Submission?

Investment proof submission is the process where employees provide evidence for the tax-saving investments declared at the start of the financial year. Employers then verify these documents to accurately adjust the Tax Deducted at Source (TDS).

Why is it important?

1. Fixed Deposits (FD): These come with a 5-year lock-in period and allow for a deduction of up to Rs 1.5 lakh under Section 80C.
2. Public Provident Fund (PPF): With a 15-year lock-in period, PPF is also eligible for Section 80C deduction.
3. National Pension Scheme (NPS): Offers additional deductions under Section 80CCD.
4. Equity-Linked Savings Schemes (ELSS): A 3-year lock-in period investment that qualifies for Section 80C.
5. Unit Linked Insurance Plan (ULIP): Another investment option eligible for Section 80C.

Steps for Submission

1. Notify employees: Clearly communicate deadlines, typically between December and January.
2. Proof Collection: Employees can submit documents either digitally or in person.
3. Verification: Employers will cross-check the documents against employee declarations.
4. Payroll Adjustment: Once verified, employers will adjust the TDS accordingly.

Benefits of Automation

Using automation tools like our E-POI cloud-based software can simplify the investment proof submission process for employers. These systems can streamline workflows, send timely reminders to employees, provide rapid feedback, and ensure accurate payroll computation—all while reducing manual errors and improving overall efficiency.

Conclusion

Investment proof submission is crucial for tax compliance. It’s important for employers and employees to work together to ensure all necessary documents are submitted on time, reducing the risk of tax-related errors. For detailed submission guidelines, always check with your HR or payroll teams