On March 24, 2020, FinMin Nirmala Sitharaman extended the deadline to make Tax-saving Investments up to June 30, 2020. Since similar extensions regarding Linking PAN with Aadhar and Belated ITR filing date were announced by FM, this announcement was also highly anticipated.
The deadline for Tax-Saving Investments has always been the last date of Financial Year, i.e March 31. Hence by this time, individuals who wish to claim a Tax Deduction of INR 1.5 lakh on their returns need to make investments under Chapter VI A.
…and comes the twist
So far 2020 seems like a sci-fi movie directed by Quentin Tarantino. And the worst part is that we don’t know if we’re past the interval or not. Coronavirus has caused nearly half the earth’s population to stay at home. Countries and Health care systems worldwide are scrambling to limit its spread and subsequently, find a vaccine.
But, there still existed complacency among countries and their attitude towards the virus. Hence, to increase awareness and boost the readiness, the virus was declared a ‘Pandemic’ by the WHO. Declaring a disease as Pandemic has symbolic importance. It means that the disease is spreading across borders and it requires immediate Global attention.
Expectedly, India responded quickly and went under complete Lockdown. Sensing the great extent of damage that Covid-19 can do many countries have declared ‘Rescue Packages’ to save their economies. Unsurprisingly, India followed suit and declared that an ‘Economic Package’ was soon to be announced.
Between March 24 and 26, Finance Minister Nirmala Sitharamn made several announcements. Some of which were:
- Last Date for filing Belated ITR for FY 2018-19
- Last Date for linking PAN with Aadhar
- Last Date for making Tax Saving Investments
- An Economic Package worth INR 1.7 Lakh Crore
What does it mean?
Simply put, people get more time to make Tax-Saving Investments. Earlier, at this time of the year, people were prone to making hasty investment decisions in order to save on taxes. But since, FM’s announcements, we have more time at our disposal to evaluate our options.
Note: The deadline for Tax-Saving Investments u/s 80C has been extended. No clarification has been given for other sections under chapter VI A.
While the declaring Covid-19 as a Pandemic dictates that countries alter their approaches towards the virus. A trickle-down effect seems to have happened among the Global Markets.
The Hong Kong and Singapore Stock exchanges were first to plummet followed by the Stock Exchanges of Europe and Asia and eventually impacting Dow Jones and BSE as well.
As a result IMF chief Kristalina Georgieva claims that the world has entered Recession. She claims that this Recession is worse than the Financial Crisis of 2009. This meltdown of Global Markets can resonate with some individuals as investment opportunities. Mainly because shares of companies with usually high prices are available at a cheaper price.
Individuals wanting to invest in Stock Markets can claim a Tax-Deductions u/s 80C for the same. However, a level headed assessment of these investment options is necessary.
Off late, more and more celebrities and industrialists have donated funds to battle Covid-19. Inspired by these big names, many of us might also feel that helping the community is the right moral choice. And donations for the same could also increase. While donating serves a greater purpose, it has an additional perk attached, i.e Tax-Benefits. Yes, Individuals wanting to donate are also eligible for a Tax-deduction u/s 80G
The Covid-19 situation might make many individuals realize the need for Medical Insurance. Hence Individuals and HUFs can claim Tax-Deduction u/s 80D.
Many Economic pundits are claiming that with every month a country spends in Lockdown, the expected GDP for that year decreases by 2%. If that wasn’t shocking enough, the International rating agency Moodys further cut down India’s GDP for FY 2020-21 from 5.3% to a struggling 2.5%. If the prediction is accurate, savings and investments will play a crucial role to keep our economy afloat. So, this extended deadline for Tax-Saving Investments is more important that one thinks.
While we are bidding you good health, please stay home and stay safe. Until next time.
Hey @sushil_verma
There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.
Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.
For eg,
Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.
The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).
Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).
As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.
Hey @Sharath_thomas , we have updated the content according to the appropriate assessment year. Thanks for the feedback.
No issues. You’re welcome!