The Importance of a Tax Declaration
A tax declaration is a document that proves an entity or individual’s earnings. It also shows the amount of taxes that they need to pay to the government or government organizations. Tax liabilities are calculated based on income, deductions, tax credits and more.
A person who earns a living through a single source of income may file a tax declaration using ITR-2A. This form is suited for individuals or Hindu Undivided Families who don’t receive any additional income from other business ventures or the sale of assets. This ITR form is also suitable for those who don’t have any winnings from horse races or lotteries.
Salaried employees must submit tax declarations to their employers before the start of the financial year. This helps the employer arrive at the net taxable income from which they can deduct TDS. This is a crucial step because it influences the final amount of tax that gets deducted from the salary.
Employees must provide their investment proofs to their employers along with the declaration. This includes insurance policies, PF contributions, EEE investments and more. The total amount invested must match the declared amount at the beginning of the financial year. If this doesn’t happen, then the employer needs to recalculate their employee’s taxable income.
Moreover, the employee’s employer might be required to check for tax-deductible expenses and investments before making any payments. If this is the case, then they need to verify the details and approve the documents. This entire process can be simplified for the employee and the employer through payroll automation. RazorpayX Payroll, for example, is an automated software that simplifies all payroll-related documentation including the tax declaration. Steuererklärung