How a Salary Certificate Can Help You Save Big on Taxes
So what is a salary certificate?
A salary certificate is a document issued by an employer in Form-16 to an employee, which provides details of the employee's salary and other components like allowances, deductions, etc. TDS (Tax Deducted at Source) is the amount of tax that is deducted from an employee's salary by the employer and deposited with the government. (gross salary, deductions made, and net salary received during a particular period, usually a financial year)
To deduct TDS on salary for the financial year 2023, employers must issue a salary certificate to their employees by the end of the financial year, i.e., March 31, 2023. The salary certificate should contain details of the employee's salary, allowances, deductions, and taxes paid during the financial year.
Here are some ways to reduce TDS on a salary certificate:
1. Submit investment declarations: If you have made any tax-saving investments like PPF, NSC, ELSS, etc. before the end of the financial year, you can submit a declaration of the same to your employer. Your employer can consider these investments and reduce the taxable income accordingly, which will result in a lower TDS deduction.
2. Submit proofs of investment: Once you have made tax-saving investments, you can submit the proof of the same to your employer. This will enable your employer to adjust your taxable income and reduce the TDS deduction accordingly.
3. Submit home loan interest and principal repayment certificates: If you have taken a home loan, you can submit the interest and principal repayment certificates to your employer. This will enable your employer to adjust your taxable income and reduce the TDS deduction accordingly.
4. Submit medical bills: If you have incurred medical expenses, you can submit the bills to your employer. Your employer can consider the medical expenses and reduce the taxable income accordingly, which will result in a lower TDS deduction.
5. Claim HRA: If you are paying rent, you can claim House Rent Allowance (HRA) as a tax exemption. Your employer can consider the HRA exemption and reduce the taxable income accordingly, which will result in a lower TDS deduction.
6. Verify the TDS deducted on your salary with your Form 26AS, which is a consolidated tax statement that shows all tax-related transactions made in your PAN.
Overall, You can submit investment declarations, proof of investment, home loan interest and principal repayment certificates, medical bills, and claiming HRA, you can reduce the TDS on your salary certificate.
However, it is important to ensure that you are submitting genuine documents and declarations to avoid any penalties or legal issues.
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