Importance of a Tax Declaration


A Steuererklärung is the completion of documentation that calculates an entity or individual’s income earned and the amount of taxes to be paid to government organizations or, potentially, back to the taxpayer. It also helps individuals claim tax benefits on investments that they make.

This includes premiums paid towards health insurance that qualify for tax deduction under Section 80C and investments made in tax saving mutual funds.

Income Tax Declaration

Filing income tax returns is a crucial step for individuals to ensure that their taxes are properly paid. This is because the government requires that people who earn a certain amount of money file their returns within a specific time frame or face penalties.

Salaried employees are required to share their income tax declaration with their employer. This helps the payroll department arrive at a net taxable salary figure which influences the amount of TDS (Tax Deduction at Source) to be deducted from their wages. Employees also need to submit investment proofs through Form 12BB in order to claim investment deductions.

It is important to disclose all sources of income in your tax return so that you are not penalized for hiding information. The IRS will examine your return carefully to make sure that all of the details are accurate. Additionally, the United Nations does not reimburse staff for penalties or interest incurred by individuals who file late.

Investment Declaration

At the beginning of each financial year, employees need to project their tax saving investments. This can be submitting proofs of investments in 80C options like life insurance, ELSS funds, PPF, etc. It can also include claiming deductions under Section 80E (interest paid on home loans), section 80G (donations) and section 80TTA (interest income from savings bank accounts).

However, at the end of the fiscal year when payroll teams start processing the TDS, they need to verify these submitted proofs to confirm that they are authentic. This verification process can be time consuming, especially when these documents are stored in different email folders or across multiple apps. As a result, it is important for employees to submit these proofs on time and avoid penalties. If they do not submit the proofs on time, their employer will have to deduct a higher amount of TDS from their salary. This is because their employer will assume that their estimated tax savings are incorrect.

Tax File Declaration

For salaried employees, filing of tax declaration is essential as it helps them arrive at the correct net taxable income and influences the amount of tax deduction at source. This is important because it also allows them to claim tax benefits such as leave travel concession and premium paid for medical insurance policies.

If a taxable person makes a self-declaration and the amount of tax payable is higher than the actual tax liability, they will be required to pay a penalty. This penalty is assessed at 3% per annum.

New employees must lodge a tax file number (TFN) declaration and may complete a withholding declaration. This information is used to work out the amount of tax to withhold from payments based on our PAYG withholding tax tables. Lodging these forms online is a convenient and secure way to meet your reporting obligations. The employer must also keep a record of TFN declaration details for each employee.

NRI Tax Declaration

NRIs must file income tax returns if they have any income in India. This may include interest income from NRE and FCNR accounts, long term capital gains on shares and mutual funds, or rental income from property located in India. NRIs can save taxes on this income by claiming exemptions, using tax treaties, or submitting Form 15G and 15H.

NRIs who have spent a significant amount of time abroad and are returning to India permanently are taxed as non-residents in India. They may also be liable to pay taxes in their country of residence based on the DTAA between India and their resident country.

In addition to taxable income, NRIs can claim deductions for certain charitable contributions made in India. These can include contributions to the Prime Minister’s Disaster Relief Fund, National Defence Fund, Chief Minister’s Distress Relief Fund Kerala, and Jawaharlal Nehru Memorial Fund. NRIs can also file for a refund of taxes paid in India if they are eligible to do so.


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