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July 22, 2020

31st July, 2020 is the last date for claiming 80C, 80D, 80G, etc deduction in Income Tax for FY 2019-20

31st July, 2020 is the last date for claiming 80C, 80D, 80G, etc deduction in Income Tax for FY 2019-20

The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive. The lockdown though necessary has led to a disastrous impact on the economy. The Government of India announced a variety of measures to tackle the situation, from food security and extra funds for healthcare and for the states, to sector related incentives and tax deadline extensions. A lot of tax-saving activity happens at the end of the financial year, which is exactly when the whole country went into a lockdown. Therefore, it was no longer possible for many people to make tax-saving investments before the March 31 deadline.

Ministry of Finance (CBDT) issued Notification 35/2020 on 24.06.2020 extending the time limit for filing ITRs, TDS/TCS returns, making investments etc. for AY 2020-21 & FY 2019-20

In a bid to give some relief to taxpayers amid the spread of Coronavirus, the government has extended the various income tax compliance deadlines.

  • The time for filing of original as well as revised income-tax returns for the FY 2018-19 (AY 2019-20) has been extended to 31st July, 2020.
  • Due date for income tax return for the FY 2019-20 (AY 2020-21) has been extended to 30th November, 2020
  • The date for furnishing tax audit report has also been extended to 31st October, 2020.
  • Date for payment of self-assessment tax in the case of a taxpayer whose self-assessment tax liability is upto Rs. 1 lakh has also been extended to 30th November, 2020
  • Date for making investment/ construction/ purchase for claiming roll over benefit/ deduction in respect of capital gains under sections 54 to 54GB of the IT Act has been extended to 30th September, 2020
  • Date for making various investment/ payment for claiming deduction under Chapter-VIA-B of the IT Act which includes section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations) etc. has also been further extended to 31st July, 2020. Hence the investment/ payment can be made upto 31st July, 2020 for claiming the deduction under these sections for FY 2019-20.

With this extension, one will now be able to make investment or payment up to 31st July 2020 for claiming deductions under the various sections for FY 2019-20. This will allow taxpayers to make the investments necessary to save taxes for the previous financial year.

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Benefit of extension of date of investment under Part B of Chapter VIA

The time line for investments which are eligible for deduction under Part B of Chapter VIA is extended to 31st July 2020. Deductions can be claimed under various sections such as section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations) etc. The Chapter VIA of Income Tax Act contains the following sections:-

  • Section 80C: Deduction in respect of life insurance premium, deferred annuity, contributions to provident fund (PF), subscription to certain equity shares or debentures, etc. The deduction limit is Rs 1.5 lakh together with section 80CCC and section 80CCD(1).
  • Section 80CCC: Deduction in respect of contribution to certain pension funds. The deduction limit is Rs 1.5 lakh together with section 80C and section 80CCD(1).
  • Section 80CCD(1): Deduction in respect of contribution to pension scheme of Central Government – in the case of an employee, 10% of salary (Basic+DA) and in any other case, 20% of his/her gross total income in a FY will be tax free. Overall limit is Rs 1.5 lakh together with 80C and 80CCC.
  • Section 80CCD(1B): Deduction up to Rs 50,000 in respect of contribution to pension scheme of Central Government (NPS).
  • Section 80CCD(2): Deduction in respect of contribution to pension scheme of Central Government by employer. Employer’s contribution to an employee’s Tier-I NPS account, maximum contribution up to 10% of employee’s salary is allowed in a financial year. 
  • Section 80D: Deduction in respect of Health Insurance premium. Premium paid up to Rs 25,000 is eligible for deduction for individuals, other than senior citizens. For senior citizens, the limit is Rs 50,000.
  • Section 80DD: Deduction in respect of maintenance including medical treatment of a dependent who is a person with disability. The maximum deduction limit under this section is Rs 75,000.
  • Section 80DDB: Deduction in respect of expenditure up to Rs 40,000 on medical treatment of specified disease from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed. In the case of a senior citizen and super-senior citizen, deduction is Rs 1,00,000 or amount actually paid, whichever is less.
  • Section 80E: Deduction in respect of interest on loan taken for higher education without any upper limit.
  • Section 80EE: Deduction in respect of interest up to Rs 50,000 on loan taken for residential house property.
  • Section 80EEA: Deduction in respect of interest up to Rs 1.5 lakh on loan taken for certain house property (on affordable housing).
  • Section 80EEB: Deduction in respect of interest up to Rs 1.5 lakh on loan taken for purchase of electric vehicle.
  • Section 80G: Donations to certain funds, charitable institutions, etc. Depending on the nature of the donee, the limit varies from 100 per cent of total donation, 50 per cent of total donation or 50% of donation with a cap of 10% of gross income.
  • Section 80GG: Deductions in respect of rent paid by non-salaried individuals who don’t get HRA benefits. Deduction limit is Rs 5,000 per month or 25% of total income in a year or Actual rent less 10% of Income, whichever is less.
  • Section 80GGA: Full deductions in respect of certain donations for scientific research or rural development.
  • Section 80GGC: Full deductions in respect of donations to Political Party, provided such donations are non-cash donations.

Deductions allowed under the income tax act will help in reducing the taxable income of the assessee, thereby, reducing the tax on the total income. This deadline extension will surely help those taxpayers who for some reasons were yet to make adequate investments for claiming deductions under the various sections of the Income Tax Act.

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