Income Tax clarifications: From belated ITR to Section 80C investments – 7 points every taxpayer should know

By: |
Published: March 31, 2020 4:19:34 PM

Both the government and the RBI have announced several relief measures to minimise the impact of coronavirus on financial markets, taxpayers, investors and the common man, among others.

Changes in tax-saving, investment rules, FY2019-20, FY2020-21, investment for FY2019-20, PPF, home loan, June 30, March 31, COVID-19 pandemicPost announcements by the finance ministry and RBI, there is some confusion in the mind of taxpayers over various tax-related issues. Here we are trying to find the answers to some of such questions.

The COVID-19 pandemic has not only severely disrupted financial markets and global economy, but has also emerged as the biggest threat to human life. The entire world is now coming together to ward off the killer virus as well as defend their economy against it. In India too, both the government and the RBI have announced several relief measures to minimise the impact of coronavirus on financial markets, taxpayers, investors and the common man, among others.

For instance, to tide over the disruptions caused by coronavirus and encourage growth, the RBI recently cut the repo rate by a massive 75 bps and also announced a 3-month loan EMI moratorium for borrowers. Similarly, Finance Minister Nirmala Sitharaman has announced a Rs 1.7-lakh crore relief package for the poor hit by the Covid-19 lockdown, along with Rs 50-lakh insurance cover per person for frontline medical personnel. The FM also extended the belated ITR filing deadline for FY2018-19 and the Aadhaar-PAN linking deadline to June 30, 2020.

However, post these announcements, there is some confusion in the mind of taxpayers over various tax-related issues. For example, whether the duration of Financial Year 2019-20 has also been extended till June 30, 2020 from March 31, 2020? Or, what will happen if someone invests in April or May? Whether that will be counted as investments for FY2019-20 or FY2020-21?

Here we are trying to find the answers to some of such questions:

1. Has FY2019-20 itself been extend to June 30?

Industry experts say that only the date has been extended for some compliances like the belated ITR filing etc, and the FY2019-20 itself has not been extended to June 30.

“FY2019-20 will close on March 31, 2020 as usual. However, the last date to invest in various tax-saving instruments pertaining to FY2019-20 has been extended to June 30, 2020,” says Adhil Shetty, CEO, Bankbazaar.com.

2. Has the FY been extended for taxability of income?

The last date for closing of a financial year has not been extended. So whatever income you have till March 31, 2020, will be considered for tax calculations; and all income post March 31, 2020, will be considered for tax calculations under the next financial year i.e. FY 2020-21.

3. Can revised or belated ITR for FY 2018-19 be filed till 30th June?

That’s correct. Now the last date to file the revised and belated returns for FY2018-19 has been extended to June 30, 2020.

4. Can deductions under Section 80C, 80D, etc. be claimed by investing till 30th June?

Tax deductions under Section 80C can be claimed under FY 2019-20 by investing till June 30, 2020. “If you have an existing health policy with renewal date before March 31, 2020, any non-payment of premium in such a policy can result in policy lapse. However, you can pay premiums within the grace period after March 31, 2020, and claim the tax deduction benefit under Section 80D under FY 2019-20,” informs Shetty.

 

5. How will housing loan interest be eligible for deduction?

Payment of home loan interest is eligible for tax benefit on accrual basis, i.e., all interest accrued till March 31, 2020, will be eligible for deduction within FY2019-20 even if you pay it before June 30, 2020. “Interest accrued after March 31, 2020, will not be eligible for deduction in FY2019-20. On the other hand, 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, subject to the upper ceiling prescribed under the applicable act for deduction,” says Shetty.

6. Can payment of old policy premiums due up to March 31 be claimed as deduction even if paid till June 30?

Expeerts say payment of premiums of old LIC policies, PPF, NPS, etc. will be eligible for deduction in FY2019-20 even if they are paid before June 30, 2020. However, a term insurance policy may fail if the insured doesn’t pay its premium whose due date falls before March 31, 2020. So, taxpayers would be well-advised to check with their insurance providers for the last date allowed to pay premiums to avoid policy lapse.

7. Whether tax-saving investments made between 1st April 2020 and 30th June 2020 will by default be attributed to the FY2019-2020 only?

Tax expert Balwant Jain says that some people are also keen to know whether all the tax saving investments made between 1st April 2020 and 30th June 2020 by default will be attributed toward the financial year 2019-2020 only? For example, if someone has already fully invested for 2019-2020 by 31st March 2020, whether the money deposited in the PPF account on 1st April shall by default be linked to the FY 2019-2020?

“The obvious answer is no. For the tax-saving payments/ investments made between 1st April and 30th June 2020, the same can either be linked to FY 2019-2020 or FY 2020-2021 as per the choice made by the tax payer,” he says.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Not only mentioning in ITR, but you need to validate your bank account to get tax refund
2ITR-1 Sahaj for AY 2020-21: What has changed and what additional details it seeks from taxpayers
3Invested during extended period? You have to mention details separately in ITR