Government extended the deadline for making tax-saving investments for the financial year 2019-20 on March 31, 2020. This is good news for people who couldn’t make these investments earlier and avail tax deductions. However, people have a lot of questions and today, we will endeavor to answer a few to offer more clarity on the extension.

Q1. What is the extension all about?

Since many people couldn’t make tax-saving investments for the financial year 2019-20 due to the lockdown, the government decided to give them an extension for the same. They can now make investments for tax deduction up to June 30, 2020. While online investments were not affected, offline investors were impacted due to the lockdown. By providing the extension, the government will give ample time to such investors to make their tax-saving investments once the lockdown is relaxed.

Q2. I am a salaried professional. How will this extension affect the TDS deducted from my salary?

An employer can deduct TDS from your salary only for the salary paid during the financial year 2019-20. This means that all employers would have completed the TDS computation for their employees by now since all the salaries for 2019-20 would have been paid. Any salary paid from April 2020 onwards will attract a TDS for the financial year 2020-21.

Q3. How will this work then? Let’s say I invest Rs.40,000 in PPF in May. There will be no point in submitting the proof of investment to my employer since the TDS computation is already done. How will I get tax benefits?

You do not have to submit the proof of investment of any tax-saving investment done between April-June 2020 for the FY 2019-20 to your employer. You need to specify them at the time of filing your returns for the said financial year. Post computation of your tax liability, you can claim a refund of the excess tax deducted.

Q4. Will all tax-saving investments made between April and June 2020 be considered for deduction in the financial year 2019-20? Is it mandatory or will I have a choice in the matter?

Any tax-saving investment made during this quarter will be eligible for deduction either in the FY 2019-20 or 2020-21. You can choose the financial year in which you want to claim the benefits. However, ensure that you don’t claim the deduction for one investment in both the financial years. Also, if you are opting for the new tax regime, then most of these deductions won’t apply.

Q5. I have already exhausted the Rs.1.5 lakh limit for deductions under Section 80C. Does this extension allow me to make investments beyond this limit and avail tax benefits?

No. The government has only extended the date by which you can make the tax-saving investments for availing deductions. The limits of these investments are the same. So, if you have exhausted the Rs.1.5 lakh limit, you cannot make more investments under that category for the same financial year.

Q6. I didn’t have medical insurance in the FY 2019-20. If I buy one between April-June 2020, will my premium payments be eligible for a tax deduction for 2019-20? 

Yes. If you buy medical insurance during this quarter, you can choose to avail of tax deductions on the premium paid for the FY 2019-20 or 2020-21. However, if you claim the deduction for 2019-20, then you cannot claim it for 2020-21. You will have to make additional premium payments to claim the deduction in 2020-21.

Q7. Are only Section 80C investments eligible or other tax-saving investments too?

All investments falling under Section 80C – Section80GGC are eligible for the extension. 

Disclaimer: The views expressed in this post are that of the author and not those of Groww