How to claim?
Those who want to claim deductions for investments made in April, May, June and July 2020 in FY20, are required to file schedule DI, or Details of Investments, in their ITR forms for FY20, which are due on November 30, 2020. Schedule DI will contain details relating to investments, deposits and payments made under section 80C to section 80GGC of the Income Tax
Act, where the eligible amount of deduction for FY20 is to be disclosed. Further, deductions attributable to any investment or expenditure made during April 1, 2020 and July 31, 2020 need to be separately specified. Any amount utilised out of the capital gains
account for FY20 for investments in schedule 54 to 54GB will also need to be specified in this schedule.
1) Insurance Policies
Premiums on running life and health insurance policies can be paid up to July 31, 2020 and will be eligible for deduction for FY20. In addition to old policies in place, even new life and health insurance policies can be taken till then and can also be claimed as a FY20 deduction under section 80D.
2) Interest on Housing Loan and Other Loans
If the EMIs on your housing loan or other eligible loans, are paid until July 31, 2020, even though the interest accrued on them is during FY20, the same can be claimed as a deduction for FY20. Interest deduction is allowed on an accrual basis, so even if you’ve paid the interest later, you can claim whatever belongs to FY20. This benefit is applicable to home loans
and other eligible loans, which fall under sections 80E, 80EE, 80EEA and 80EEB of the Income Tax
3) Investment in PPF / EPF / NSC
(Public Provident Fund)/ NSC (National Savings Certificates) investments can be made between April to July 2020, provided the amount claimed in a financial year across all section 80C investments does not exceed Rs 150,000 in entirety. EPF
(Employees’ Provident Fund) contributions made for the period April to July 2020 can either be claimed in FY20 or FY21. The taxpayer should take care to ensure no double deduction is being claimed. Investments made in approved pension schemes also fall in this category of deductions.
The extension given for investments under the Income Tax
Act, has also been extended to donations, and any donation
made under section 80G of the Act up to July 31, 2020, will be allowed as a deduction for FY20.
5) Accounting for Capital Gains
For taxpayers who have received income from capital gains
during FY20, there is good news, too. Any investments made under section 54 to section 54 GB of the Income Tax Act, relating to investment, construction or purchase, can be claimed as a capital gains
deduction, if made up to September 30, 2020.
One of the key points to note while accounting for these investments made in the months of April to July is that a deduction once claimed in FY20 on an investment made, cannot be claimed again for FY21, for the same amount. However, any balance of investment unclaimed in FY20 can be claimed the following year. For example, Rs 100,000 invested in PPF
in January 2020 means that only a further Rs 50,000 can be invested, as section 80C is capped at a limit of Rs 150,000. Hence, if a taxpayer had to further invest Rs 100,000 in June 2020, he can only claim Rs 50,000 for FY20 additionally. Deposits can be separately claimed for FY21 as per the normal process.
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