ITR Filing: Claim your tax deductions for the extended period under Schedule DI

By: |
December 10, 2020 11:36 AM

The claim for deductions and exemptions under Schedule DI will pertain to the investments a taxpayer wants to make for FY 2019-20.

Tax Relief Budget 2021 Expectations, Budget 2021 Expectations for Tax ReliefDuring these times, reducing the tax burden on individuals to enable further spending, thus increasing demand in the economy is needed.

Usually, a taxpayer gets time until the end of a financial year to make the tax-saving investments or deposits, which is 31st March 2020, for FY 2019-20. But due to the spread of COVID-19, the government had to enforce lockdown across the country. So, to provide relief to taxpayers in terms of timeline, the government had extended the due dates expiring between 20th March and 30th July 2020 to 31st July 2020. Hence the due date to make the tax-saving investments also got extended till 31st July 2020.

CBDT had updated all the ITR forms to incorporate the investments made in this extended period in a new Schedule DI (Details of Investment) separately. Hence all the investments made from 1st April to 31st July to claim tax deductions for FY 2019-20 are to be mentioned in this schedule DI for a clear differentiation.

The claim for deductions and exemptions under Schedule DI will pertain to the investments a taxpayer wants to make for FY 2019-20. Meaning only timelines of the deduction was extended, but the aggregate deduction cannot exceed the yearly limit applicable to the FY 2019-20. For example, (i) deduction allowed under section 80C is still capped at Rs 1.5 lakh for tax saving investment made from 1st April 2019 to 31st July 2020. (ii) capital exemption investment allowed in bonds under section 54EC including an extended period of Rs 50 lakh only.

Tax saving deductions that are allowed to be claimed for an extended period in Schedule DI are chapter VI A deductions. These include LIC premium, Public Provident Fund, principal payment of housing loan, investment in equity-linked saving scheme etc. under section 80C, payment towards LIC annuity plan under section 80CCC, deposit in pension account under section 80CCD. Further, a deduction for payments such as medical insurance and expenses under section 80D, 80DD and 80DDB & deductions allowed for payments towards Interest on housing and other eligible loans under section 80E, 80EE, 80EEA and 80EEB. Donations made to the recognized organizations under section 80G, 80GG, 80GGA and 80GGC are also covered for claiming an exemption for the extended date.

Time limit for tax saving exemptions for investing the capital gain proceeds in another eligible asset was also extended till 30th September 2020.

These rollover investments made during 1st April 2020 to 30th September 2020 for claiming long term and short term capital gain exemption are also to be mentioned in Schedule DI. Capital gain exemptions allowed under section 54 for purchase of residential property against a sale of residential property, transfer of agricultural land against the purchase of another agriculture land under section 54B, purchase of residential property against the transfer of long term capital asset other than residential property under section 54F and purchase of specified bonds against the sale of land or building under section 54EC are eligible for extended period exemptions.

Usually, in case of capital gains, a taxpayer gets a definite time to invest to be eligible for claiming the exemption. Hence for all the capital gain transactions, where the time allowed to make an investment or construct or purchase a house may be expiring during 20th March 2020 to 29th September 2020, the government extended the same to 30th September 2020 for claiming capital gain exemption. For example, section 54 allows a capital gain exemption for the sale of long term capital assets like land or building by investing in specified bonds of REC, NHAI etc. within 6 months of the date of transfer. Hence if a taxpayer makes a sale of land say for example, on 30th October 2019, the last date for investing in bonds is 31st April 2020. However, with this extension, the taxpayer could still avail exemption if the bonds are purchased till 30th September 2020.

All these extended deductions and exemptions have to be reported separately by taxpayers in Schedule DI provided in the ITR. A different tab is available with name DI in the ITR form. The screenshot of the Schedule DI is captured below for reference.

(The author is Founder and CEO, ClearTax)

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