In mild of the extraordinary scenario ensuing from the COVID-19 lockdown measures, the Finance Division has launched an ordinance on 31st March 2020 offering leisure in numerous facets of the Direct and Oblique Tax regimes. Certainly one of these bulletins extends tax saving investments for FY 2019-20 until 30th June 2020. This may enormously profit many Revenue Tax assessees. The next are key particulars that you could know.
What’s the nature of this leisure?
Usually tax saving investments underneath Part 80C, 80D, 80G, and many others. (Chapter VI-A and VI-B) for a monetary yr must be made between 1st April and 31st March of the relevant monetary yr (FY). Thus to save lots of revenue tax in FY 2019-20 (AY 2020-21), you had been initially required to finish all of your tax saving investments between 1st April 2019 and 31st March 2020. Nevertheless, with the introduction of this ordinance by the Finance Ministry dated 31st March 2020, all tax saving investments made until 30th June 2020 will now be thought-about as a part of FY 2019-20 investments.
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Successfully the Finance Ministry has granted everybody an extension of three months for making tax saving investments for Evaluation 12 months 2020-21 (AY 2020-21). Whereas it’s as of but unclear whether or not revenue thought-about for AY 2020-21 on the time of Revenue Tax Return submitting will prolong from April 2019 to March 2020 or April 2019 to June 2020, this does present a unprecedented alternative. The next are 3 doable situations and doable methods to learn from this leisure:
Situation 1. You haven’t reached the restrict of your investments underneath Part 80C, 80D, and many others.
Attainable Decision: Not like earlier years, the place you’ll have been unable to utilise tax saving funding advantages as much as the prescribed restrict, you may nonetheless do it for FY 2019-20. Simply to recap, most restrict u/s 80C for a yr is Rs. 1.5 lakh with a further Rs. 50,000 u/s 80CCD for investments made into Nationwide Pension System (NPS)/ NPS Lite and Atal Pension Yojana (APY).
Additionally learn: Full listing of 80C Funding Choices
Additionally, u/s 80D, you may nonetheless buy medical insurance coverage for your self/dependants and declare advantages of as much as Rs. 25,000 (self and dependants) and as much as Rs. 1 lakh (senior citizen tax assessee + dependants + tremendous senior citizen mother and father) for FY 2019-20. Do be aware that your medical insurance coverage premium is to be paid by 30th June 2020 to get this profit. Moreover donations made underneath Part 80G until June 30, 2020 can present further tax aid for FY 2019-20.
Know Extra about Part 80D and Part 80G
Situation 2. You’ve already reached the restrict of your investments u/s 80C, 80D, and many others.
Attainable Decision: Sadly this is among the uncommon situations that cautious tax planning will allow you to down. Investing in tax saving investments throughout this 3 month grace interval won’t present any further profit from a taxation perspective. It’s most likely a greater concept to maintain your emergency reserves intact and add to it throughout this era. Alternately it’s possible you’ll take into account investing in non-tax saving devices so as to add to your wealth.
Situation 3. Your employer already deducted TDS and you continue to haven’t exhausted tax saving funding limits
Attainable Decision: In case your employer has already deducted TDS, then, the tax calculation was primarily based solely on investments made until 31st March 2020. As per this Authorities announcement, you now have time until thirtieth June 2020 to extend your tax saving funding allocation for FY 2019-20. Any further tax profit that you just may be eligible for could be claimed as an revenue tax refund on the time of ITR submitting in AY 2020-21.
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To Sum up
The COVID-19 lockdown measures are traditionally extraordinary and we nonetheless have an extended option to go earlier than we’re previous the present disaster. Whereas it’s only prudent that one maintains and if doable will increase emergency money reserves throughout these extraordinary instances, allocating some extra cash in direction of tax saving investments to share much less with the Revenue Tax Division shouldn’t be a foul plan both.
Additionally Learn: COVID 19 Reduction Measures Introduced by the Finance Ministry
