Clarification on Government reliefs
FAQ
1.
Whether the financial year is changed to June 2020
closing?
a) No, the financial year
closure is not extended. Only the date of compliance which were required by 31stMarch
2020 either by the taxpayers or by the tax authorities has been deferred till
30thJune 2020.
b) There are many benefits
which can be availed by the taxpayers as a result of extension of date from 31st March
to 30th June.
c) Lot of fake news about
change in the financial year is circulated creating chaos amongst the
taxpayers. Furthermore no official announcement by the FM has been made till
now regarding extension of the financial year.
2.
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 after the end
of the relevant assessment year. However, due to lock down till 14th April,
Government extended the filing of return of FY 2018-19 (AY 2019-20) till 30th June.
Readers may note that earlier there was a period of 2 years for filing or
revising the return which is amended to 1 year.
3.
Whether deduction u/s 80C can be claimed by making
investment in PPF/LIC etc till 30.06.2020?
Yes, any person who have not made investment in
PPF/LIC etc which are eligible for deduction u/s 80C can do it now. Following
other investment can also be made:-
a) An additional deduction of
Rs. 50,000/- U/s 80CCD(1B) for investment made under New Pension Scheme(NPS).
It is over and above deduction of Rs. 1.50 Lakh u/s 80C.
b) Deduction u/s 80D, if any
mediclaim made.
4. Maximum of Rs. 1.50 Lakh
only can be deposited in the PPF A/c. If the person has not deposited any
amount till 31.03.2020 & 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 till 31.03.2020 and if he deposits it in between April to
June 2020 then surely he would be eligible for deduction u/s 80C in 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 Lakh for deposit in the PPF Account. To take care of this situation,
the Government need to amend the PPF rules to provide that Rs. 3 Lakh in
aggregate can be invested for the FY 2019-20 & 2020-21.
5. Whether housing loan
interest till 30th June 2020 will be eligible for deduction
against income for the FY 2019-20?
As already discussed, housing loan interest is
eligible for deduction on accrual basis and so only interest accrued till 31st March
2020 will be eligible for deduction.
6. Whether the person who has
incurred loss in the month of April or May will be eligible for setting off
while filing the income tax return for the FY 2019-20?
It may be noted that only the date of certain
compliance 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 the FY 2019-20 wherein income till 31st March
2020 will only be considered.
7.
Whether the PPF / NPS Account opened after 31ST March
2020 but before 30th June 2020 will be eligible for deduction
under chapter VI-A?
Yes, all investment, including an account opened
even 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 after ending of the lockdown to claim an additional deduction of Rs.
50,000/- u/s 80CCD(1B) which is in addition to deduction of Rs. 1.50 Lakh u/s
80C.
8.
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.
9.
Whether income earned in between 1st April
2020 to 30th June 2020 will be taxable in the FY 2019-20?
No, Income earned in between 1st April
2020 to 30th June 2020 will be taxable in the FY 2020-21. Only
the income of the FY 2019-20 (i.e., till 31st March 2020) will
be taxable for the FY 2019-20.
10. 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 30thJune?
CBDT has empowered to CIT (Exemption) to condone
the delay in filing of the Audit Report by trust in Form No. 10B. 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.
However as per recent announcement by FM, it does
not empower CBDT for any extension beyond 31st March 2020.
For any further extension, CBDT has to specifically
issue a notification enabling CIT (Exemption) to condone the delay in uploading
of audit report in Form No. 10B.
11. Whether the person who have
earned the LTCG and the 6 months period for claiming deduction u/s 54EC is
falling within the March 2020 then whether it can be deferred till 30thJune?
As of now, there is a time limit of 6 months for
claiming Long Term Capital Gain (LTCG) exemption u/s 54EC. 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 20th March
when the Government has announced the preventive measure against COVID 2019. In
respect of all the LTCG wherein 6 months has expired till 20th March
may not be eligible to take the benefit of extension i.e. till 30th June
2020. In short, all the capital gain which has arisen after 20th September
will be eligible for capital gain exemption u/s 54EC as per recent announcement
by FM.
[Readers may note that judiciary have taken a
reasonable view while granting capital gain exemption in various exceptional
cases. Even if the property is sold just few days prior to 20th September, then
the court may grant the benefit of above extension based on the merits of the
case. Taxpayers may invests the amount keeping this in mind].
12. If any person pay school fees of a 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)?
Or
if the person pay the premium which is due in March – 2020 and if he
makes the payment of the same before
30.06.2020 then whether he can get deduction u/s 80C in the FY 2019-20 (AY
2020-21)?
Or
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 made an
announcement and clear 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
public notification would be available within few days for clarification on
above 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 for the 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 for FY 2020-21
b) if the person pay the
premium which is due in March – 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 2019-20 (AY
2020-21). Only the payment of such policies which has become due before
31stMarch would be considered for deduction u/s 80C.
c)
If a person deposits the amount in April to June
2020 in his housing loan account then he would be eligible for deduction u/s
80C subject to the condition that the amount is due till March – 2020. 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 31stMarch
only will be eligible for deduction. In short, interest accrued between 1st April
to 30th June 2020 will also be eligible for deduction u/s
24(b).
Source:
Based on Authors view and government guidelines.