Economy

Are you yet to make a tax saving investment for FY20? Don’t worry, you have time till June 30

Shishir Sinha New Delhi | Updated on March 29, 2020

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Normally, the last date for such actions - in a financial year - is March 31

If you have not made an investment or a deposit to avail the exemptions under the Income Tax Act for the FY20 yet, you need not worry. You will have an additional three months to do so. Normally, the last date for such actions - in a financial year - is March 31.

Considering the nationwide lockdown, in light of the coronavirus outbreak, the Government has allowed the public to avail the tax-saving exemptions - under Income Tax Act for FY20 - till June 30, 2020. This emanates from Finance Minister Nirmala Sitharaman’s announcement, related to the taxpayers’ compliance, on March 24.

She had said, “Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer including investment in saving instruments or investments for roll over benefit of capital gains under Income Tax Act, Wealth Tax Act, Prohibition of Benami Property Transaction Act, Black Money Act, STT law, CTT Law, Equalization Levy law, Vivad Se Vishwas law where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020.”

A senior Income Tax Department official, who was contacted by the BusinessLine, had confirmed the details.

How does this work?

At present, one has to invest or deposit a sum of up to Rs 1.50 lakh under Section 80C of the Income Tax Act to avail the tax-saving exemptions.. The key instruments include National Saving Certificates (NSC), Public Provident Fund, Sukanaya Samridhi Scheme, Premium for Life Insurance Policy, Equity Linked Saving Scheme (ELSS), repayment of home loan, Specified Fixed Deposits in Banks and Employee Provident Fund. Beyond Rs 1.50 lakh, one can also invest in instruments such as the National Pension Scheme (NPS), Health Insurance, Infrastructure Bond and the interest repayment on home loan (for specified period).

When an investment or a deposit is made, the amount applicable under the Income Tax Act is deducted from the total income. The tax is levied on the remaining amount, as per to slab and rates.

Now, the Union Budget for FY 2020-21 has given the option of paying taxes at lower rates provided the assessee is not availing any exemption. It means from FY2020-21 onwards, a tax payers can either use tax savings instruments, claim the deduction and pay according to existing rates or do not claim any deduction and pay tax at new rates. A taxpayer can use any option for one year and another in next year.

Published on March 29, 2020

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