• CA Ruchi Goel Anchal

Impact of Extension of timeline of 80C Investments

Updated: May 11

1) If Salary is Computed or Paid by Employer before Investment

By Apr 2020 or May 2020, salary for FY 2019-20 would have been already paid. The employers would have closed the Income-tax computation for TDS of the employee. Hence, employer will not be able to consider the additional investment made during the extended period. Any additional investment made during the extended period can be claimed at the time of filing of Income-tax Return for FY 2019-20 and refund can be claimed for FY2019-20 for higher tax deducted.

2) If Salary is not Computed or Paid by Employer before Investment

If employer has not paid the salary for any month of 2019-20 and investment is made by the employee before that date, the employee will have the choice to claim the deduction in any year. But you should be careful that no double deduction is claimed, means benefit should not be claimed in both the years.

3) Contribution to PF

Banks may have to align systems to accept deposits for a previous financial year. For example, in the FY 2020-21, you may have two entries reflecting in your PPF bank account, one pertaining to investment for FY 2019-20 and the other for FY 2020-21. Usually PPF banking systems do not accept cheques or deposits, once the maximum limit of Rs 1.5 lakh is breached. Banks will also have to make suitable changes to ensure that PPF deposits are accepted for the next FY.

4) Medical Insurance Paid between April to June 20

It is not possible to pay for a health policy now to cover the period which has already elapsed. A policy payment made now will only cover the upcoming period. And, therefore, payments made towards a health insurance policy between April 1, 2020 and June 30, 2020 shall be eligible for claiming deduction for FY 2020-21. Only the payment of such policies which has become due before 31stMarch would be considered for deduction u/s 80C for FY 2019-20.

5) Contribution to PM Care Fund under 80G

Section 80G allows 100 per cent deduction for the amount contributed to this Fund. All contributions made between April 1, 2020 and June 30, 2020 will be eligible for deduction for only one FY either 2019-20 or 2020-21 under section 80G, as specified under section 80G(5A).

6) Investment for Benefit under Sec 54 to 54GB

The investment/ construction/ purchase made up to 30th June 2020 shall be eligible for claiming deduction from capital gains arising during FY 2019-20.

7) Benefit of Housing Loan Interest

Housing loan interest is eligible for deduction on accrual basis and so only interest accrued till 31st March 2020 will be eligible for deduction. The payment may be made between April to June 20.

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