How to claim income tax deduction for investments made in April – July 2020

Joseph B. Hash

The govt experienced imposed a nationwide lockdown in March because of to the coronavirus pandemic outbreak across India. As a result of this lockdown that started in March, times before the shut of the financial 12 months, a number of taxpayers experienced been denied the opportunity to make tax conserving […]

The govt experienced imposed a nationwide lockdown in March because of to the coronavirus pandemic outbreak across India. As a result of this lockdown that started in March, times before the shut of the financial 12 months, a number of taxpayers experienced been denied the opportunity to make tax conserving investment for financial 12 months 2019-twenty (FY20). The govt experienced hence extended the because of day up to June thirty, 2020, and has recently provided a even more extension until eventually July 31, 2020 for creating tax conserving investments pertaining to FY20. This go has provided taxpayers more time to make investments and help you save tax.

Using the above instance into thought, it is completely up to the taxpayer to make your mind up which financial 12 months he would like to assert the deduction for investments created in the months of April to July 2020. Nonetheless, yet another place to think about is that the govt has released a new tax regime in Spending plan 2020, wherever taxpayers can fork out taxes at diminished tax costs, if they opt to not assert any deductions from their income.

If a tax filer decides to fork out tax beneath this new regime for FY21, then it would be prudent to program in advance and assert whatever investments are probable for FY20 only. The remaining unclaimed investments will not be in a position to be carried ahead in this sort of cases.

How to assert?

All those who want to assert deductions for investments created in April, Might, June and July 2020 in FY20, are necessary to file program DI, or Aspects of Investments, in their ITR types for FY20, which are because of on November thirty, 2020. Routine DI will contain facts relating to investments, deposits and payments created beneath section 80C to section 80GGC of the Earnings Tax Act, wherever the qualified quantity of deduction for FY20 is to be disclosed. Even further, deductions attributable to any investment or expenditure created for the duration of April 1, 2020 and July 31, 2020 need to be individually specified. Any quantity utilised out of the capital gains account for FY20 for investments in program 54 to 54GB will also need to be specified in this program.

Your investment options

1) Insurance coverage Policies

Rates on functioning existence and wellness insurance plan procedures can be paid up to July 31, 2020 and will be qualified for deduction for FY20. In addition to previous procedures in place, even new existence and wellness insurance plan procedures can be taken until then and can also be claimed as a FY20 deduction beneath section 80D.

two) Curiosity on Housing Personal loan and Other Financial loans

If the EMIs on your housing bank loan or other qualified loans, are paid until eventually July 31, 2020, even even though the fascination accrued on them is for the duration of FY20, the identical can be claimed as a deduction for FY20.

Curiosity deduction is authorized on an accrual basis, so even if you’ve paid the fascination later on, you can assert whatever belongs to FY20. This benefit is relevant to property loans and other qualified loans, which fall beneath sections 80E, 80EE, 80EEA and 80EEB of the Earnings Tax Act.

three) Investment decision in PPF / EPF / NSC

PPF (General public Provident Fund)/ NSC (Countrywide Cost savings Certificates) investments can be created in between April to July 2020, furnished the quantity claimed in a financial 12 months across all section 80C investments does not exceed Rs 150,000 in entirety. EPF (Employees’ Provident Fund) contributions created for the period April to July 2020 can possibly be claimed in FY20 or FY21. The taxpayer ought to acquire care to ensure no double deduction is becoming claimed. Investments created in authorized pension strategies also fall in this category of deductions.

four) Donations

The extension provided for investments beneath the Earnings Tax Act, has also been extended to donations, and any donation created beneath section 80G of the Act up to July 31, 2020, will be authorized as a deduction for FY20.

five) Accounting for Funds Gains

For taxpayers who have gained income from capital gains for the duration of FY20, there is fantastic information, way too. Any investments created beneath section 54 to section 54 GB of the Earnings Tax Act, relating to investment, development or purchase, can be claimed as a capital gains deduction, if created up to September thirty, 2020.

Just one of the critical factors to take note though accounting for these investments created in the months of April to July is that a deduction after claimed in FY20 on an investment created, can’t be claimed all over again for FY21, for the identical quantity. Nonetheless, any harmony of investment unclaimed in FY20 can be claimed the subsequent 12 months. For instance, Rs one hundred,000 invested in PPF in January 2020 usually means that only a even more Rs 50,000 can be invested, as section 80C is capped at a restrict of Rs 150,000. Hence, if a taxpayer experienced to even more make investments Rs one hundred,000 in June 2020, he can only assert Rs 50,000 for FY20 in addition. Deposits can be individually claimed for FY21 as for each the ordinary method. ======================= Archit Gupta is Founder and CEO of ClearTax. Views are his have.

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