Usually, a taxpayer gets time till the finish of a economic year to make the tax-saving investments or deposits, which is 31st March 2020, for FY 2019-20. But due to the spread of COVID-19, the government had to enforce lockdown across the nation. So, to present relief to taxpayers in terms of timeline, the government had extended the due dates expiring among 20th March and 30th July 2020 to 31st July 2020. Hence the due date to make the tax-saving investments also got extended till 31st July 2020.
CBDT had updated all the ITR types to incorporate the investments created in this extended period in a new Schedule DI (Details of Investment) separately. Hence all the investments created from 1st April to 31st July to claim tax deductions for FY 2019-20 are to be described in this schedule DI for a clear differentiation.
The claim for deductions and exemptions beneath Schedule DI will pertain to the investments a taxpayer desires to make for FY 2019-20. Meaning only timelines of the deduction was extended, but the aggregate deduction can’t exceed the yearly limit applicable to the FY 2019-20. For instance, (i) deduction permitted beneath section 80C is nevertheless capped at Rs 1.5 lakh for tax saving investment created from 1st April 2019 to 31st July 2020. (ii) capital exemption investment permitted in bonds beneath section 54EC such as an extended period of Rs 50 lakh only.
Tax saving deductions that are permitted to be claimed for an extended period in Schedule DI are chapter VI A deductions. These contain LIC premium, Public Provident Fund, principal payment of housing loan, investment in equity-linked saving scheme and so on. beneath section 80C, payment towards LIC annuity strategy beneath section 80CCC, deposit in pension account beneath section 80CCD. Further, a deduction for payments such as healthcare insurance coverage and expenditures beneath section 80D, 80DD and 80DDB & deductions permitted for payments towards Interest on housing and other eligible loans beneath section 80E, 80EE, 80EEA and 80EEB. Donations created to the recognized organizations beneath section 80G, 80GG, 80GGA and 80GGC are also covered for claiming an exemption for the extended date.
Time limit for tax saving exemptions for investing the capital acquire proceeds in a different eligible asset was also extended till 30th September 2020.
These rollover investments created for the duration of 1st April 2020 to 30th September 2020 for claiming extended term and quick term capital acquire exemption are also to be described in Schedule DI. Capital acquire exemptions permitted beneath section 54 for acquire of residential home against a sale of residential home, transfer of agricultural land against the acquire of a different agriculture land beneath section 54B, acquire of residential home against the transfer of extended term capital asset other than residential home beneath section 54F and acquire of specified bonds against the sale of land or creating beneath section 54EC are eligible for extended period exemptions.
Usually, in case of capital gains, a taxpayer gets a definite time to invest to be eligible for claiming the exemption. Hence for all the capital acquire transactions, exactly where the time permitted to make an investment or construct or acquire a residence may perhaps be expiring for the duration of 20th March 2020 to 29th September 2020, the government extended the very same to 30th September 2020 for claiming capital acquire exemption. For instance, section 54 permits a capital acquire exemption for the sale of extended term capital assets like land or creating by investing in specified bonds of REC, NHAI and so on. inside 6 months of the date of transfer. Hence if a taxpayer tends to make a sale of land say for instance, on 30th October 2019, the final date for investing in bonds is 31st April 2020. However, with this extension, the taxpayer could nevertheless avail exemption if the bonds are bought till 30th September 2020.
All these extended deductions and exemptions have to be reported separately by taxpayers in Schedule DI offered in the ITR. A various tab is obtainable with name DI in the ITR kind. The screenshot of the Schedule DI is captured beneath for reference.
(The author is Founder and CEO, ClearTax)