Tax-saving deadlines extended: You may claim tax benefits for FY2019-20 or FY2020-21?

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Published: April 7, 2020 8:16:28 PM

Investors are confused if investments till June 30 should be made for FY 2019-20 only, or it may be done for any of the two years and if so, how to determine which investment is for which financial year?

Coronavirus Outbreak, COVID-19, Novel Coronavirus COVID-19, income tax, tax-saving investments, extension in tax-saving investment deadline, FY 2019-20, FY 2020-21, SIP, ELSS, regular investment, voluntary investmentThe government has extended the cut off date for making investments in tax-saving instruments from March 31, 2020 to June 31, 2020.

As the financial year 2019-20 ended amid the nationwide lockdown to contain the spread of highly contagious Novel Coronavirus Covid-19, it has become very difficult for taxpayers to meet the last-minute tax-saving investment targets, especially for those who are not tech-savvy and rely on offline investment modes.

Although online investors had the opportunity to invest in tax-saving instruments, keeping in view the difficulty faced by offline investors, the government has extended the cut off date for making investments in tax-saving instruments from March 31, 2020 to June 31, 2020.

As the financial year (FY) 2019-20 ended on March 31, 2020, and FY 2020-21 has already started on April 1, 2020, there is confusion among investors whether any investment made till June 30 would be considered for FY 2019-20 or FY 2020-21?

Investors are also confused if investments till June 30 should be made for FY 2019-20 only, or it may be done for any of the two years and if so, how to determine which investment is for which financial year?

However, to avoid confusion, one may defer voluntary investments for FY 2020-21 till July 1, 2020 but some investments having fixed due dates may attract interest or even lead to their lapse.

For example, life insurance policies have fixed due dates, which may be delayed till one month grace period without interest. But further delay would attract interest. In case of health insurance, delay beyond the grace period would result in cancellation of the policy.

Similarly, monthly investments through systematic investment plan (SIP) in equity linked savings scheme (ELSS) or monthly premium payout on insurance policies would also continue to deduct during the extension period for FY 2020-21.

Providing solution to the problems, CA Karan Batra, Founder & CEO, CharteredClub.com, says that investors may make investment during the extended period either for FY 2019-20 or FY 2020-21 or both, and it is up to investors to decide which investment is for which financial year and claim tax benefits accordingly.

But what if an investor claims tax benefits for both the financial years against the same investment?

“It will be considered as ineligible and penalty would be levied if anyone does the same,” said Batra.

So, you have to choose any one financial year out of FY 2019-20 and FY 2020-21, for which you want to claim benefit against any voluntary or regular investment made during the extended investment period, but can’t take benefit for both the years.

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