In view of the prevailing epidemic in the form of Corona virus, Government has very reasonably announced on March 24th, 2020 about the extension of the compliance falling due on 31st March 2020 to 30th June 2020. The present extension is sure to provide relief to lot many taxpayers, especially senior citizens and individuals who are not well versed with the online digital facilities. There is a lot of confusions & chaos amongst the taxpayers with regard to the scope of recent announcements. Few are under the impression that the financial year is being extended from to 30th June 2020. I have compiled all the issues in the form of FAQ to clarifying the doubts arising from present extension
- Whether the financial year closure is extended to 30th June 2020 closing?
(i) The present announcement by FM is not resulting in the extension of the financial year. The fake news about extension of the financial year is getting circulated. The financial year is not extended to 30th June. Only the date of compliances which were required to be done by 31st March 2020 (either by the taxpayers or by the tax authorities) has been relaxed till 30th June 2020.
(ii). There are lot many benefits which can be availed by the taxpayers as a result of extension of date from 31st March to 30th June.
(iii) The change in the financial year is exclusively for RBI whose financial year used to close on 30th June every year. This news appears to have been wrongly interpreted by majority of the citizens. For all other entities & taxpayers, the financial year is same and will close in March only.
- Whether belated returns or revised return of FY 2018-19 can be filed now till 30.06.2020?
Yes, all taxpayers who have not filed the return of income of FY 2018-19 can file or revise the return till 30th June 2020. In normal course, belated income tax return cannot be filed or revised after the end of the relevant assessment year. However, due to current lock, Government has permitted the filing of ITR for the FY 2018-19 (AY 2019-20) till 30th June. It may be noted that there is no waiver from the payment of late fee in case a person is filing its belated return. The due date for filing the income tax return for FY 218-19 was already over in July or September 2019 only. All return filed after the said due date can be only with late fee. The present extension does not provide any immunity from the late fee which is mandatory in nature. The last opportunity to file the ITR for FY 2018-19 was 31st March 2020 which is now stands extended to 30th June 2020.
- Whether deduction u/s 80C can be claimed by making investment in PPF/LIC etc till 30.06.2020?
The due date for investment in the LIC/PPF/NSC etc for claiming deduction u/s 80C in FY 2019-20 is extended from 31.03.2020 to 30.06.2020. It means that now individuals & HUF can complete their tax-saving investment for FY 2019-20 till 30.06.2020. Even investment in National Pension Scheme (NPS) for deduction u/s 80CCD(1B), payment towards Mediclaim insurance policy for deduction u/s 80D, etc can also be done.
- Maximum of Rs. 1.50 Lakh only can be deposited in the PPF A/c. If the person has not deposited any amount in FY 2019-20 & if he wish to deposits it between April to June 2020 then whether he will be able to deposit it again after June 2020 for deduction u/s 80C in the FY 2020-21 (AY 2021-22)?
Yes, there is a restriction of Rs. 1.50 Lakh for deposits in the PPF A/c in one year. If the person has not deposited any amount in the PPF Account in FY 2019-20 & if he wish to deposits it in between April to June 2020 then surely he will be eligible for deduction u/s 80C for the FY 2019-20. However, as per the present PPF rule, such person may not be able to invest again Rs. 1.50 Lakh for the FY 2020-21 as there is a yearly ceiling of Rs. 1.50 for deposit in the PPF Account. To take care of this situation, the Government needs to amend the PPF rules to provide that Rs. 3 Lakh in aggregate can be invested for the FY 2019-20 & 2020-21.
- Whether income earned in between 1st April 2020 to 30th June 2020 will be taxable in the FY 2019-20?
No. Not at all. Income earned in between 01.04.20 to 30.06.20 will be taxable in the FY 2020-21. The income of the FY 2019-20 (i.e., till 31st March 2020) will be taxable for the FY 2019-20.
- Whether the person who has incurred loss in the month of April or May or June will be eligible for set off while filing the income tax return for the FY 2019-20?
It may be noted that only the date of certain compliance/investment has been extended to 30th June 2020. The closure of books of accounts will be on 31st March 2020 only. The loss incurred in the month of April or May or June will not be eligible for set off against income of FY 2019-20 wherein income /loss till 31st March 2020 will only be considered.
- Whether the PPF / NPS Account opened after 31ST March 2020 but before 30th June 2020 will be eligible for deduction?
Yes, all investment, even in account opened after March 2020 but before June 2020 will be eligible for deduction u/s 80C. Rather, it’s an opportunity for the taxpayers who have not invested in NPS to invest it immediately by online mode or afterwards till 30.06.2020 to claim an additional deduction of Rs. 50,000/- u/s 80CCD(1B). This deduction is in addition to deduction of Rs. 1.50 Lakh u/s 80C.
- Whether trust would be eligible for expenditure incurred after 31st March 2020 till 30th June 2020 as “application of income” u/s 11?
It is a very interesting issue. Unless and until the suitable clarification is incorporated by the CBDT, expenditure incurred after 31st March 2020 till 30th June 2020 may not qualify as “application of income” u/s 11.
- Whether the trusts who are now eligible to seek the condonation for delay in filing of audit report in Form No. 10B can seek such condonation by 30th June 2020?
CBDT has empowered to CIT (Exemption) to condone the delay in filing of the Audit Report in Form No. 10B by the trust. It may be noted that the CBDT has specially empowered it for specific financial year and it is to condone the delay in uploading / submitting the audit report. Recent announcement by FM don’t extend the power of the CIT till 30.06.2020, which means that the condonation after 31st March 2020 may not be possible without CBDT specific direction for this.
- Whether the persons who have earned Long Term Capital Gain (LTCG) and the 6 months period is falling before March 2020, then whether it can also be deferred till 30thJune?
As of now, there is a time limit of 6 months for claiming LTCG as exempt u/s 54EC by investing it in a specified bonds issued by NHAI/REC. The wording of the press release conveys that the time limit has been extended to 30th June in all such cases. However, in my view, the exemption u/s 54EC is extended only in cases where the 6 months period is expiring on or after 24th March 2020, i.e., the date of date extension announcement of by FM. In respect of all the LTCG wherein 6 months has expired on 24th March may not be eligible to take the benefit of 30th June 2020. In short, all LTCG arisen after 24.09.2019 will be eligible for the benefit of extension till 30.06.2020.
- If the person pay the school fees of the child for the academic season 2020-21 i.e., the amount becomes due after April-2020, whether he can get deduction u/s 80C in the FY 2019-20 (AY 2020-21)?
if the person pay the premium which is due in April – 2020 and if he makes the payment o of the same before 30.06.2020 then whether he can get deduction u/s 80C in the FY 2019-20 (AY 2020-21)?
If a person deposits the amount in housing loan A/c in April to June 2020 then whether the deduction u/s 80C would be eligible in FY 2019-20 (AY 2020-21)? Whether interest accrued between 1stApril to 30th June 2020 will also be eligible for deduction u/s 24(b)?
It may be noted that Finance Minister has merely made an announced and declared its intention to relieve the taxpayers from the compliance burden of March 2020 in view of lockdown due to Covid 2019. The same is to be backed by necessary notification by the CBDT u/s 119(2)(b). The CBDT notification would be there within few days which will clarify all such issues. However, going by the logic & purpose for which the relief is proposed, in my view, following would be the exact nature of relief:
a) If the person pay the school fees of the child related to academic season 2020-21 i.e., the amount becomes due after April-2020 then he may not be granted deduction u/s 80C in the FY 2019-20 (AY 2020-21) but would be eligible for deduction in FY 2020-21
b) If the person pay the premium which is due in April – 2020 and if he makes the payment of the same before 30.06.2020 then he can get deduction u/s 80C in the FY 2020-21 (AY 2021-22) & not in the FY 2019-20. Only the payment of such policies which has become due till 31.03.2020 would be considered for 80C deduction in FY 2019-20.
c) If a person deposits the amount in housing loan A/c in till June 2020 then he would be eligible for deduction u/s 80C. It may be noted that interest on housing loan is eligible for deduction on accrual basis and not on payment basis. All interest which is due till 31st March only will be eligible for deduction. In short, interest accrued between 01.04.20 to 30.06.20 will not be eligible for deduction u/s 24(b).
- Whether the person who has not done payment of advance tax will get immunity from interest now?
Taxpayer who has not made the payment of commensurate amount of advance tax must pay it before 31stMarch itself. The last date for payment of advance tax was 15th March 2020 (much before the present situation of corona virus & recent announcements by FM). The relief form interest is not provided in above present announcements. In short, if there is a shortfall in the payment of advance tax, then taxpayers may make the payment of advance tax before 31st March so that no interest liability gets attracted u/s 234B or 234A subsequently.
- Whether the revised time limit of 30thJune will be applicable for Vivad se Vishwas Scheme also?
The deadline is also extended for the taxpayers who wish to opt for the dispute resolution “Vivad se Vishwas scheme”
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