- Date : 05/05/2020
- Read: 4 mins
The taxpayers can complete their tax-saving exercise till June 30. Read to understand what this means to you.
The government has decided to give a breather to tax-payers by extending the last date for investment declarations. Investors will now be able to get tax credit for FY 2019-20 on investments made until June 30, 2020 – a full 3 months before the normal deadline of March 31 each year. The Indian Stamp Act has been amended to allow the change.
Nirmala Sitharaman, the finance minister, at a press briefing said , "Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer including investment in saving instruments or investments for roll over benefit of capital gains under Income Tax Act, Wealth Tax Act, Prohibition of Benami Property Transaction Act, Black Money Act, STT law, CTT Law, Equalization Levy law, Vivad Se Vishwas law where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020."
What this really mean for tax payers?
Normally, income tax returns for the previous financial year cannot be filed after the expiry of the current assessment year. However, the extension allows taxpayers additional time to perform the following activities from the tax-saving perspective:
- Investments in fixed and market-linked instruments
- TDS returns can be filed for the last quarter of FY 19-20
- Delayed returns for the previous financial year i.e FY 2018-19 can be filed
Taxpayers can claim benefits under Section 80C and 80D till June 30, 2020, under the grace period granted by the government which would not have been available otherwise. This applies to fixed income instruments such as Public Provident Fund (PPF) and National Pension Scheme (NPS) as well as Mediclaim and LIC.
Related: Tax-saving components of your CTC
Prescribed limits will still be applicable as follows:
Public Provident Fund:
If an investor has not invested in PPF for the current financial year, he can do so during April-June 2020 and claim benefit for the previous year i.e FY 2018-19. However, if an investor has already invested up to the maximum limit of Rs 1.50 lakh in the current year, he will be unable to claim credit for the upcoming financial year i.e FY 2020-21 as there is an annual limit applicable.
Life insurance premium:
Premium payment on life insurance and NPS can be made by June 2020 and claimed for the current financial year i.e FY 2019-20. However, there is a caveat. The premium for the policy in question should have become due for payment for 31st March for the benefit to be applicable.
The government has asserted that the deadline had been extended as part of the financial stimulus package aimed at kick-starting the economy. Among the measures announced so far include expedited tax refunds, relaxed norms for Employee Provident Fund (EPF) withdrawals, and GST relief. This is expected to boost liquidity for salaried employees and business owners. Though most banks and other financial institutions are operating with minimal staff, investors can easily manage their investments online. In fact, banks have been proactively referring customers to their online portals highlighting the ease with which they could access the full range of banking services without having to leave the safety of their homes.
Related: Why should you avail life insurance?
Can tax deduction be claimed in the next financial year?
By extending the deadline for investments, the government has provided investors with more time to catch up with their tax obligations. It is at the discretion of the individual taxpayer whether or not to claim tax deduction for the present financial year i.e FY 2019-20 or to claim it in the following year i.e FY 2020-21. This also means that if an investor is eligible for claiming tax benefit for the preceding financial year i.e FY 2018-19, he can do so during this period. New tax regime vs old tax regime: Should you switch?