Refer this notification of Ministry of Finance.
# There is no change in Financial Year. Financial Year 2020-21 starts from 1st April 2020.
# There is no change in income tax calculation for FY 2019-20 or 2020-21.
# Any voluntary contribution like investing in ELSS, Tax Saving FDs, NSC, NPS or Life Insurance Premium or Health Insurance Premium from your pocket can be considered for such extension.
# Default contributions like EPF or Home Loan EMIs will not be eligible for such extension.
# Suppose you have a shortfall of investing Rs.1.5 like under Sec.80C for FY 2019-20. Such shortfall can be covered by investing now up to 30th June 2020 and claim for deduction under Sec.80C for FY 2019-20.
# But do remember that even though you invested in FY 2020-21 (up to 30th June 2020), you are free to claim the deduction either for FY 2019-20 or FY 2020-21 (investments done between 1st April 2020 to 30th June 2020).
# Same investment can’t be claimed for both the finanial years (if investments done between 1st April 2020 to 30th June 2020).
# For products like PPF or SSY, the financial year already ended on 31st March 2020 itself. Hence, any contribution in such product after 1st April 2020 will be considered for FY 2020-21. But contribution to these schemes between 1st April 2020 to 30th June 2020 can be claimed for deduction for FY 2019-20 or FY 2020-21.
Let us take an example. For FY 2019-20 assume that you have invested Rs.1,00,000 in either PPF or SSY. For FY 2020-21, the maximum limit to invest in PPF and SSY will not change. The maximum limit under these two products is Rs.1,50,000 for FY. Hence, assume that you have invested Rs.1.50,000 in FY 2020-21 (before 30th June 2020).
Then you can claim tax benefits of Rs.1,00,000 or Rs.1,50,000 for FY 2019-20 by taking the benefit of this extension. However, if you took the benefit of Rs.50,000 for FY 2019-20, then you can’t take Rs.1,50,000 benefit for FY 2020-21 (even though you have invested the amount in FY 2020-21).
However, you not took the additional benefit of Rs.50,000 which you invested post FY 2019-20, then you can take the full benefit of Rs.1,50,000 for FY 2020-21.
# Dividend income received up to 31st March 2020 was tax-free. Any dividend income post 1st April 2020 will be considered as income for this FY as per the Budget 2020.
# Do remember that this extnesion is available for Chapter-VIA-B of IT Act which includes Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations), etc.
Conclusion:-It is now clear that one can invest up to 30th June 2020 for those investments which are eligible for deductions under Chapter VIA-B. It is a good opportunity for those who due to the non-availability of money may not utilize the Sec.80C and other options available under this Chapter. But use this option cautiously. Otherwise, you may end up in not utilizing the investment done during FY 2020-21 for AY 2021-22.
# There is no change in income tax calculation for FY 2019-20 or 2020-21.
# Any voluntary contribution like investing in ELSS, Tax Saving FDs, NSC, NPS or Life Insurance Premium or Health Insurance Premium from your pocket can be considered for such extension.
# Default contributions like EPF or Home Loan EMIs will not be eligible for such extension.
# Suppose you have a shortfall of investing Rs.1.5 like under Sec.80C for FY 2019-20. Such shortfall can be covered by investing now up to 30th June 2020 and claim for deduction under Sec.80C for FY 2019-20.
# But do remember that even though you invested in FY 2020-21 (up to 30th June 2020), you are free to claim the deduction either for FY 2019-20 or FY 2020-21 (investments done between 1st April 2020 to 30th June 2020).
# Same investment can’t be claimed for both the finanial years (if investments done between 1st April 2020 to 30th June 2020).
# For products like PPF or SSY, the financial year already ended on 31st March 2020 itself. Hence, any contribution in such product after 1st April 2020 will be considered for FY 2020-21. But contribution to these schemes between 1st April 2020 to 30th June 2020 can be claimed for deduction for FY 2019-20 or FY 2020-21.
Let us take an example. For FY 2019-20 assume that you have invested Rs.1,00,000 in either PPF or SSY. For FY 2020-21, the maximum limit to invest in PPF and SSY will not change. The maximum limit under these two products is Rs.1,50,000 for FY. Hence, assume that you have invested Rs.1.50,000 in FY 2020-21 (before 30th June 2020).
Then you can claim tax benefits of Rs.1,00,000 or Rs.1,50,000 for FY 2019-20 by taking the benefit of this extension. However, if you took the benefit of Rs.50,000 for FY 2019-20, then you can’t take Rs.1,50,000 benefit for FY 2020-21 (even though you have invested the amount in FY 2020-21).
However, you not took the additional benefit of Rs.50,000 which you invested post FY 2019-20, then you can take the full benefit of Rs.1,50,000 for FY 2020-21.
# Dividend income received up to 31st March 2020 was tax-free. Any dividend income post 1st April 2020 will be considered as income for this FY as per the Budget 2020.
# Do remember that this extnesion is available for Chapter-VIA-B of IT Act which includes Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations), etc.
Conclusion:-It is now clear that one can invest up to 30th June 2020 for those investments which are eligible for deductions under Chapter VIA-B. It is a good opportunity for those who due to the non-availability of money may not utilize the Sec.80C and other options available under this Chapter. But use this option cautiously. Otherwise, you may end up in not utilizing the investment done during FY 2020-21 for AY 2021-22.
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