Tax Saving investment date increased to 30th June from 31st March: Know the Details

Deepti Shikha

25 May, 2023

Various deadlines related to Income Tax which was to end on 31st March have now been extended to 30th June, giving respite to the taxpayers. Finance Minister Nirmala Sitharaman announced the extension of the deadlines looking at the circumstances related to COVID-19. There was significant pressure on the part of the Government for the extension of various deadlines. Both the Government and the RBI has announced varied relief measures to minimise the effect of coronavirus on financial markets, investors, taxpayers, investors and the common man, amongst others. The Finance Minister, at a press conference dated on 24th March 2020 announced that taxpayers have time until 30th June 2020 to complete their tax-saving exercise for Financial Year 2019-20. The earlier deadline was 31st March 2020.

This announcement bought relief to taxpayers, especially to those individuals who usually invest in the last 10-20 days of the financial year. They were worried about missing the investments due to closure and lockdown at various locations, and it is not possible to venture out and make investments or even to make sure to deposit the minimum mandatory sum required. Hence, by extending a tax saving investment date, the government has helped taxpayers in various ways.

Ordinance by Government Regarding Relief Provided in Tax Saving Investment Date

The Government has issued an ordinance on 31^st March, 2020 to bring into effect compliance relief measures for taxpayers in the wake of Covid 19 that was announced by the Finance Ministry on 24^th March, 2020.  Tax Saving investment date has been increased in various government schemes. The key points in the ordinance are as follows:

• The ordinance also allowed for 100% exemption of donations made to PM Cares fund, set up to aid containment and relief efforts against the virus outbreak.
• Donation made up to 30th June 2020 to the PM Cares Fund shall be eligible for 100 per cent deduction under section 80G of the Income Tax Act from income of Financial Year 2019-20. The Government also clarified that adding the limit on deduction of 10% of gross income shall also not be applicable for such donations.
• Individual taxpayer and corporate taxpayer paying concessional tax on the income of FY 2020-21 under the new income tax regime can make donation to PM Cares Fund till 30th June and can claim deduction under section 80G against income of FY 2019-20.
• It was further clarified that taxpayers can make investments or payments in LIC, Public Provident Fund (PPF) and National Savings Certificates (NSC) under Section 80C, medi-claim under Section 80D and donations under 80G till 30th June, for claiming deductions for FY 2019-20.
• For financial year 2019-20, investment, construction or purchase made till 30th June, shall be eligible for claiming deduction from capital gains under sections 54 to 54GB of the Income Tax Act, 1961.
• The last date of filing of original as well as revised income-tax returns for the financial year 2018-19 is extended till 30th June, 2020.
• The last date for linking Aadhaar-PAN linking has been pushed to 30th June, from 31st March.
• The date for commencement of operation for the SEZ units for claiming deduction under deduction 10AA of the Income Tax Act, 1961 has also been extended to 30th June, for the units which received necessary approval by 31st March 2020.
• A reduced rate of interest of 9% shall be charged for non-payment of income-tax which includes advance tax, tax deducted at source, tax collected at source, equalization levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) which are due for payment from 20th March till 29th June, if they are paid by 30th June.
• Taxpayers can also benefit from the Vivad se Vishwas Scheme till 30th June, without any additional payment of 10% for settling the outstanding tax disputes.
• The last date for filing the revised and belated returns for financial year 2018-19 has been extended to 30th June 2020.
• Tax deductions prescribed under Section 80C can be claimed by investing till 30th June 2020.
• Payment of home loan interest is eligible for tax benefit on the accrual basis, i.e., all interest accrued till 31st March 2020, will be eligible for deduction within FY2019-20 even if you pay it before 30th June 2020.
• Payment of premiums of old LIC policies, PPF, NPS, etc. will be eligible for deduction in FY2019-20 even if they are paid before 30th June 2020.

Indirect Tax Relaxation

• The Finance Ministry in its notification stated that 30th June, 2020 will be the last date for furnishing of central excise returns which has the due date in March, April and May 2020. It also extended the last date for filing of appeal, refund applications etc as per the Central Excise Act, which had set up its due date on 20^th  March and 29^th  June.
• The deadline prescribed for filing of appeal with respect to service tax has been given a similar relief, i. e., it has been extended till 30^th June.
• Assesses can also avail the Sabka Vishwas Legal Dispute Resolution Scheme 2019, till 30^th  June, which will provide more time in settlement of indirect tax disputes.
• The Government not only extended the time limits under the Taxation and Benami Acts, it also amended the CGST Act, 2017 and also changed the due dates for many compliances which includes the statement of outward supplies, filing refund claims under ITC, filing of appeals, amongst others as  per the recommendation made  by the GST Council.

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Financial Year Not Extended

The Government clarified that it has not extended the current financial year 2019-20; it will end as scheduled on 31st March. Only the tax saving investment date has been extended. Industry persons have been demanding extension of fiscal year by three months in view of the economic impact caused by outbreak of Covid-19.

Good News for Taxpayers

Individuals can complete their tax-saving investments for the financial year 2019-2020 by 30th June 2020. It is a big relief for taxpayers as the due date has been extended.

Banks in this time of crisis are working with very limited staff, which is providing only essential services. From 23^rd March, the services offered by the bank will be limited to: Cash deposit and withdrawal of cash, cheque-clearing services, and Government transactions along with remittances. The mutual fund houses have asked their investors to use only the online transactions as their offices are closed, due to the ongoing lockdown declared by Government.

The extension will provide relief to especially those senior citizens and individuals who are not comfortable using online facilities to transact and are yet to complete their tax-savings for FY 2019-20.

Conclusion

The finance ministry has clarified that the last date for closing of financial year is still the same i.e 31^st March, 2020. Hence the calculation of tax will be based on income you have till 31^st March, 2020.But the government has failed to clarify on some issues like the cut off investment made under Section 80 C has been increased or not. Also, there is a confusion in the extension date made in voluntary contribution made in National Pension System or NPS as under Section 80 CCD (1B), contribution made in payment of health insurance premium as per Section 80D and on donations made under section 80G.