Tax-saving deadline extended: Will investments made now be considered for FY20 or FY21?

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Updated: Jun 26, 2020 2:59 PM

Investors are especially confused whether investments made till July 31st should be considered for FY 2019-20 only, or FY 2020-21.

income tax, income tax return, ITR, due date for ITR filing, Novel Coronavirus COVID-19, COVID-19 lockdown, extension in compliance deadlines, Form 16, Form 16A, Form 26AS, CBDT, Income Tax e-FilingThe government extended the cut-off date twice for making investments in tax-saving instruments from March 31, 2020, to July 31, 2020, keeping in view the difficulty faced by investors, as well as government offices.

The financial year 2019-20 ended with the start of the nationwide lockdown to contain the spread of Covid-19. Tax saving investment deadline being March 31st for the FY 2019-2, taxpayers were facing difficulty in making the last-minute tax-saving investments. Additionally, since then the government offices have also been closed or are working below strength and, hence, have not been able to function as required. Because of which the government extended the cut-off date twice for making investments in tax-saving instruments from March 31, 2020, to July 31, 2020, keeping in view the difficulty faced by investors, as well as government offices.

With the extension, however, there has been confusion among investors whether the investment made until July 31st would be considered for the financial year (FY) 2019-20 or FY 2020-21. This is because as the financial year 2019-20 ended on March 31, 2020, the next financial year 2020-21 started on April 1, 2020, but with the extension, of the period from April 1st, 2020 to June 31, 2020, is a common period for both financial year.

Investors are especially confused whether investments made till July 31st should be considered for FY 2019-20 only, or FY 2020-21. Archit Gupta, Founder and CEO – ClearTax, says, “It can be made for any financial year – and can be claimed as desired in a particular financial year.” Hence, as an investor, you can make investments during the extended period for both FY 2019-20 or FY 2020-21. If you are making investments for both FY 2019-20 and FY 2020-21, it is up to you to decide which investment is for which year and then claim tax benefits.

Keep in mind that your investments should not be claimed twice. Tax benefits for both the financial years against the same investment cannot be claimed. Gupta says, “This is not allowed, there are specific provisions in the income tax act, which disallow claiming the same amount in more than one financial year. Doing this comes with penal consequences.” He adds, “Investment made should not be claimed twice. Disclosures should be properly reported, i.e. schedule DI (Details of Investments) is required to be populated.”

Even with the extension, some investments have fixed due dates crossing which may attract interest or even lead to lapse. For instance, during the extension period for FY 2019-20 monthly SIP investments, insurance policy premium payouts (monthly) would also continue to be deducted for FY 2020-21. Insurance policy investments have fixed due dates, with grace period without interest, however, further delay attracts interest or in the worst case, cancellation of the policy.

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