Why is Tax Declaration important ?
According to the Income Tax Act, the employers must deduct tax at source, based on the estimated income, after calculating estimated expenses and investments for that financial year.
If employees do not submit the declaration, they will then be needed to claim a refund when they furnish the Income tax return. However, the Income Tax Department will alarmingly examine the tax deduction.
Also, the Union Budget 2020 has introduced a new tax regime with fewer deductions for expenses and investments, and employees are allowed to compare old and new tax regimes. Based on that and to choose the better option; they need to calculate their tax liabilities and are required to make an Income Tax Declaration.