As the country has been locked-down for next few weeks (and hopefully not more) due to Coronavirus, there is some relief for tax savers. Many were anxious about missing the due date of March 31, 2020 for investing in tax savings instruments to claim tax relief.
But in a welcome announcement, the government has allowed taxpayers to complete tax-saving exercise for FY2019-20 by June 30, 2020. The earlier deadline was March 31, 2020.
Just to clear confusion if any:
- FY2019-20 still is from 1st April 2019 to 31st March 2020. This extension is only to make your investments made between 1st April 2020 to 30th June 2020 eligible for FY2019-20. In normal circumstances (and without the extension), these would be considered as part of FY2020-21.
- Only the income earned between 1st April 2019 and 31st March 2020 will be considered in FY2019-20. Your income from 1st April 2020 to 30th June 2020 will still be part of FY2020-21.
- The next financial year will start from 1st April 2020 (and not on 1st July 2020). There is no extension on that front.
- As per my understanding, EPF contributions will follow regular FY without being impacted by extension. Only the voluntary savings instruments like NSC, ELSS, PPF will get the extension till 30th June 2020. Tax saving via the rest of the options (like EPF contributions, home loan tax benefits EMIs, etc.) are still applicable only till 31st March 2020.
What about those who have done their tax-saving investments for FY2019-20 before 31st March 2020?
Nothing to worry as you have already completed your tax savings for the year.
But that brings another question.
If these people invest between 1st April 2020 and 30th June 2020, then these investments will still be considered as part of previous FY2019-20 or the new one FY2020-21? I think this is still not clear but as per my assumptions, it will be considered as part of the FY2020-21 and should be on a self-declaration basis. Logically, that’s how it should be.
So you can invest in tax-savings options between 30th Jun 2020 for both the financial years, i.e. FY2019-20 & FY2020-21. But its quite obvious that you cannot use the same investment for both the financial years. Hopefully, the government will come out with clarifications on this soon. Or maybe it will work on a self-declaration basis. Let’s see.
Note – I am no tax expert. And this is my initial assessment of the announcement. I will update the post if there are any further change/clarifications in the understanding or if something new comes upon reading the fine print.