Employees generally submit the proofs of Investements/Expenses eligible for tax deduction to reduce TDS accordingly at the time of salary payment.

However, employees cannot argue with employer organization if it doesn’t consider the proofs submitted for 80G (donations made to charitable institutions. According to CBDT vide its CIRCULAR NO.1/2010 F.No.275/192/2009IT (B)]dt. 11/01/2010, while deducting income tax at source from salary the employer need not consider 80G payment of employee. The point no. “G” of the circular states – “Generally no deduction should be allowed by the D.D.O. from the salary income in respect of any donations made for charitable purposes. The tax relief on such donations as admissible under section 80G of the Act, will have to be claimed by the taxpayer in the return of income. However, in cases where employees make donations to the Prime Minister’ National Relief Fund, the Chief Minister’s Relief Fund through their respective employers, it is not possible for such funds to issue separate certificate to every donation as indicated above will be admissible under section 80G on the basis of employer’s certificate.

We can also refer to “Circular No.2/2005, dated 12-1-2005” for additional information. The department has also published this information in the handbook named “TDS on Salaries”. The links the circulars & the handbooks are attached below.

Circular 2, 2005 – Circular No. 2/2005, dated 12-01-2005 (incometaxindia.gov.in)

Circular 1,2010 – Circular No. 1/2010, dated 11-01-2010 (incometaxindia.gov.in)

Handbook published by IT Dept. – 1052_TDS on Sal_Eng_SET Series-35 – BY IOP.pmd (incometaxindia.gov.in)

However, many employers are still considering 80G proofs of employees as this is not a mandatory provision. The abovementioned circular just clarifies that employer has right to reject employee’s 80G proofs while deducting TDS on salaries.