Proof of Investment (POI) submission is akin to a puzzle. Each piece – rental receipt, investment proof, travel ticket, etc. – fits seamlessly to display an employee’s tax stature. But it’s more than just a checkbox. When solved, the POI puzzle will unlock valuable benefits: minimized taxes, efficient payroll, and delighted employees.
During greytHR’s Parichay webinar, a seasoned expert with almost two decades of experience, shared insights to optimize Proof of Investment (POI) submission.
Missed the presentation? This post has the key takeaways! Read on and watch the webinar recording too.
Decoding the Salary Puzzle
Before exploring the nuances of POI submission, it’s important to understand what is “salary” under the Income Tax Act. Salary is not just the monthly wage paid to an employee; it comprises allowances, bonuses, and all other benefits, paid in cash or kind. However, a few components are exempt from taxation or eligible for deductions. When calculated accurately, it can lead to a significant reduction in the overall tax liability.
Key Exemptions:
House Rent Allowance (HRA): This valuable exemption provides relief for employees who pay house rent. The exempt amount is calculated based on the least of the following:
Actual House Rent Allowance
Rent minus 10% of salary
50% of salary (applicable to metros like Mumbai, Delhi, Kolkata & Chennai) or 40% of salary (for others)
- Leave Travel Allowance (LTA): This provision exempts travel expenses incurred by employees on domestic trips. It’s limited to the economy-class fare of a national carrier (Air India), AC first-class train fare, or other public transport if there’s no rail connectivity, whichever is lesser. If the employee is unable to avail the benefit during the block period (2022-25), one claim can be carried forward the subsequent year.
Common Deductions:
Employees can further reduce their taxable income by claiming deductions on certain types of investments and expenses. Here are a few:
Section 80C
This section covers investment options like contributions to Public Provident Fund, Employee Provident Fund, life insurance, ULIPs, NPS, pension funds, and tuition fees. The maximum permitted deduction is ₹1.5 lakhs.
Section 80TTA/80TTB
These provide deductions of ₹10,000 (all employees) and ₹50,000 (senior citizens) respectively, on a savings account interest.
Section 80D
This allows deductions on medical insurance premiums. But the limit is ₹25,000 for individuals/families and ₹50,000 for senior citizens.
Section 80E
This section allows deductions on the full education loan interest.
Section 24
Under this section, employees can claim deductions on the interest paid on their home loans.
Guiding Employees Through the Maze
The HR team has the onus of facilitating a hassle-free POI submission process. When they wield the essential knowledge and resources, they can ensure accuracy, compliance, and a great employee experience.
- Enlighten employees
- Collect & verify documents
- Ensure accurate record-keeping
- Answer employee questions
- Stay abreast of tax laws
- Help employers avoid legal issues
Putting It All Together
Systematic and accurate POI submission enables employers to realize significant benefits for the organization and employees. Besides being a compliance requirement, it is also a way to streamline an organization’s tax strategy and streamline payroll processes.
The key takeaways, along with the detailed inputs offered by the expert speaker, should be an invaluable resource for employers wanting to navigate the POI maze with greater confidence.
Eager to solve the POI puzzle and unlock more benefits for your employees?
Watch the Webinar Recording 👇
Solve the POI puzzle in minutes—greytHR automates proof collection, instant validation, and real-time tax calculations, keeping payroll compliant and employees delighted.
