Long standing grouse has been answered ...

Today's Economic Times had a nice article on the front page : "you don't need proof to claim LTA".

Ever since I came back from the US, I have had this issue to deal with. If I had to claim tax exemption, why do I need to submit medical bills and LTA tickets to my employer ? Is my employer the ENFORCER of tax laws ? Also from an employer viewpoint, isnt this unnecessary paperwork and expense ? Not to mention the cussing by their employees. :-)

It also led to a lot of unanswered questions with regards to privacy. Since my medical prescriptions and bills had to submitted, the back office guy verifying the bills had access to all sorts of unwanted information. Why does my employer need to know what ills ail me ? And they also did not have any full proof mechanism of ensuring the bills were destroyed. Compare this to the legislation in the US where even the parent can't access his son's medical record directly.

I tried to take this up with my employers, but it was a losing battle.
UNTIL TODAY !

The income tax act section 10 does not state that employer has any statutory, legal, fiduciary obligation to collect proof for LTA claimed. The onus of proof rests with the employee. As is the case in all parts of the world. The same thing can now be extrapolated to Medical Reimbursement. Employee claims tax benefit, let him prove it when he files returns. Tax deduction at source is one thing, but to become an IT police dog is whole different thing.

In fact with TDS in place, and all these extremely stupid processes you dont need individual income tax returns to be filed. Your employer is anyways doing the work for you.

Here is how it will work. (only for salaried people !)

1. No individual tax payers.
2. Each Employer to have one "Employee Tax" account
3. Employer collects TDS for all their employees and deposists it in this account.
4. Pays tax for all his employees from this accnt. Collects evidence, bills and whatever they need. (which they do anyways today !)
5. Save me the burden.

It is said the Income Tax department spends 24% of its revenue on administering its own offices. So with fewer tax payers, maybe we can save some of that admin cost !