Even with the extension, some investments have fixed due dates, crossing which may attract interest or even lead to their lapse.
Amidst the COVID-19 crisis, the government extended the tax-saving investment deadline multiple times for FY2019-20. Currently, the last date for income tax saving investments is set on July 31, for the Financial Year 2019-20, from the earlier deadline March 31, 2020, and June 30, 2020.
This extension gave taxpayers extra time to complete their tax-saving investments for the Financial Year 2019-20. Due to the COVID-19 pandemic, there are taxpayers who have not been able to invest in the necessary financial products to save tax.
However, note that tax-saving investments should not be claimed twice. Tax benefits for 2 financial years against the same investment cannot be claimed, i.e. FY2019-20 and FY2020-21. Experts say, even if taxpayers try to do so, it will not be allowed, as there are specific provisions in the Income Tax Act, which disallows claiming the same amount in more than 1 financial year. Additionally, doing so could come with penal consequences. Hence, it is suggested to make proper disclosures.
Even with the extension, some investments have fixed due dates, crossing which may attract interest or even lead to their 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. Investments in Insurance policies have fixed due dates, with grace period without interest, however, further delay attracts interest or in worst case cancellation of the policy.
Here are a few investment options that you can look at to reduce your tax outgo for this year:
- Insurance premium payment outgo is eligible for tax benefit under Section 80C.
- Investments in Provident Funds such as EPF, PPF, etc., qualify for tax deduction under Section 80C.
- Under Section 80C of the Income Tax Act, 1961, Sukanya Samriddhi Scheme comes with tax-free maturity, and interest and tax deductions are also available.
- Payment made towards the principal sum of a home loan is eligible for tax deduction.
- Equity Linked Saving Schemes (ELSS or tax saving mutual funds) an NSC both qualify for tax deduction.
- Investors also enjoy tax benefits with investments in Senior Citizen Savings Scheme (SCSS).
- With NPS you can avail an additional deduction of up to Rs 50,000 over and above the Rs 1.5 lakh limit under Section 80CCD(1B). Employer’s contribution towards NPS also qualifies under Section 80CCD(2).
- Both bank and post office fixed deposits qualify for tax deduction.
- Under Section 80CCC, payment made towards pension plans as well as mutual funds qualifies for tax deduction.
- Payment made towards certain Government-backed schemes such as Atal Pension Yojana qualify for tax deduction under Section 80CCD(1).