Saturday, December 21News That Matters

80C Investments deadline extended – some points for clarification

Government has announced several measures to minimise the impact of coronavirus on the taxpayers and investors. As part of these measures, the Finance Minister has:

  • extended the deadline for submitting belated ITR filing deadline for FY2018-19 to June 30 2020
  • extended the Aadhaar-PAN linking deadline to June 30, 2020.
  • extended the timelines for making 80C investments for FY 2019-2020 from 31Mar2020 to 30June2020.

After these announcements, there is some confusion over the tax issues. Following are some details to clarify such points of confusion:

1. Has FY2019-20 itself been extend to June 30 and whether the income in Apr – June 2020 will be taxable within FY 2019-2020?

NO. The FY2019-20 will close on March 31, 2020 as usual. Only income till March 31, 2020, will be considered for tax calculation. All income post March 31, 2020, will be considered for tax calculations under the next financial year i.e. FY 2020-21.
The last date to invest in various tax-saving instruments pertaining to FY2019-20 has been extended to June 30, 2020

2. Can I claim deductions under Section 80C, 80D, etc. by investing till 30th June?

You can make investments till 30th June and claim deduction for FY 2019-2020. But note that you cannot claim twice for the same investment.
For investments made during Apr-June 2020, the taxpayer has a choice to choose the tax year (FY 19-20 or FY20-201) in which he / she can claim the deduction.

3. How the deduction for housing loan interest will be claimed?

All interest accrued till March 31, 2020, will be eligible for deduction within FY2019-20. You donot have to actually pay the interest to claim.
Interest accrued after March 31, 2020, will not be eligible for deduction in FY2019-20.

Note that – the principal payment is considered on payment basis for claiming the tax benefits, so all installments paid before June 30, 2020, can be claimed as tax deduction under FY2019-20 (upto 80C limit)

4) EPF deducted from salary in the month of April, May, Jun, 2020 – Which year can I claim the deduction

EPF deductions for April 2020, May 2020 and June 2020 are eligible for deduction under Section 80C for FY 2019-20 if the limit for Section 80C (i.e. INR 150,000) is not exhausted. Otherwise, the employee can claim in FY 2020-21. But note that you can not claim twice.