Save taxes while you can! You still have till June 30 to invest
Due to the country-wide lockdown, the government has extended compliance related deadlines, which include the deadline for tax saving investment
Investors looking to make tax-saving investments are confused over extension of the March 31 deadline.
Due to the country-wide lockdown, the government has extended compliance related deadlines, which include the deadline for tax saving investment.
The source of confusion
Notably, amendments to Indian Stamp Act were to become effective from April 1 this year but the government notification extended the deadline to July 1. Meanwhile, a fake news about the extension of the financial year circulated on social media, following which the Ministry of Finance issued a statement. "There is a fake news circulating in some section of media that the Financial Year has been extended. A notification issued by the Government of India on 30th March 2020 with respect to some other amendments done in the Indian Stamp Act is being misquoted. There is no extension of the Financial Year."
This created confusion among investors looking to make tax-saving investments for the financial year 2019-20.
Can you make tax-saving investments after March 31?
Extending the deadline for investments does not require the government to extend the entire financial year by a quarter. So far specific deadlines have been extended which have been duly notified. "The tax relief package announced last week extends the due date (31 March) for making tax-saving investments. However, the CBDT is yet to issue a notification specifying the amendments to the Income Tax Act," says Archit Gupta, Founder and CEO- Cleartax.
It means, unlike previous years, March 31 is not the last day for making your tax-saving investments. "The time for making tax-saving investments for FY 2019-20 expires on March 31, 2020. The government has granted relief by extending the deadline to June 30, 2020," adds Gupta. If you have any shortfall to match then you can make the investment by June 30 this year.
What should investors do?
If you cannot make investment online then you will have to visit the office of the financial institution to make the investment that is inconvenient given the restrictions on movement under the lockdown. Once the lockdown is relaxed, you will get ample time to make these investments until June. "Investors can use this additional window to make tax investments. The government is expected to issue formal notification in this regard. We can expect that the operational guidelines will indicate that the employee has to choose the FY for which the benefit can be availed since the same investment cannot be used to avail benefits for two years," says Saraswathi Kasturirangan, Partner, Deloitte India.
However, many investments can be made online for which you do not have to wait for the lockdown to get over. Tax-saving fixed deposit is the most convenient option to fulfill the investment gap this year from the comfort of your home. Also, most banks allow their customers to open and make investment in PPF online. Similarly, if your KYC is done with the Sebi, you can make investment in ELSS funds also. Many banks also offer the facility to make NPS investment online. You may utilise these options to meet your tax-saving investment needs.