Have you done financial planning for 2019-20 before the deadline 31st March 2020/30th July 2020/30th September 2020 – Check out what you missed and what are relief measures provided by FM in view of Covid19 (Coronavirus) Outbreak?
Financial year 2019-20 is reaching to its ends in few weeks. 31st March is an important deadline with reference to tax Planning, missing it may result in higher tax liability. We are required to complete our tax planning before 31st march 2020, as we are required to file Income tax return for FY 2019-20 during 2020-21. For claiming many deductions and exemptions in our income tax return, we need to take right step before 31st march 2020. So if you have not completed your tax planning for FY 2019-20, you are left with few weeks only. For your reference, given below is the list of ten important financial decisions which are required to be taken before 31st march 2020.
Relief Measures in Income tax due to outbreak of corona virus
On date 24-3-2020, Union Finance &Corporate Affairs Minister Smt. Niramla Sitharaman announced several important relief measures taken by the Government of India in view of COVID-19 outbreak, which includes following measures relating to Income tax:-
- Extend last date for income tax returns for (FY 18-19) from 31st March, 2020 to 31st July, 2020.
- Aadhaar-PAN linking date to be extended from 31st March, 2020 to 31st March, 2021.
- Vivad se Vishwas scheme – no additional 10% amount, if payment made by 31st December 2020.
- Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal,furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer including investment in saving instruments or investments for roll over benefit of capital gains under Income Tax Act is extended to 31st July 2020.
- For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 and 30th June 2020, reduced interest rate at 9% instead of 12 %/18 % per annum ( i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.
Decision regarding Capital Gain Planning
In budget 2018, Long term capital gain (covered under STT) above Rs. 100000/- are made taxable @ 10%. This tax on long term capital gain is applicable w.e.f. 01-04-2018. Hence upto 31-03-2018, all long term capital gains (covered under STT) was exempt u/s 10(38). Still you have to decide regarding LTCG on the basis of your equity planning and market price of your portfolio:-
- Review your portfolio for tax planning on capital gain. For example if in your return you have carried forwarded any short term capital loss which is allowed to carry forward only upto 8 assessment years. If this is your 8th year, review your portfolio any if any short term capital gain is available, sell the shares and book short term capital gain to adjust carried forwarded short term capital loss(STCL) otherwise this will laspe. You can buy your shares again by paying marginal brokerage which you have to bear. But remember that sell and buy transaction should not be done on the same day.
Decision regarding Investment to claim deduction U/s 80C
U/s 80C a deduction of Rs 1,50,000 can be claimed, it means An Individual or HUF can reduce your total taxable income up to Rs 1,50,000 from through section 80C. Section 80C provides list of investments/ expenditures which is allowed as deduction. If you are short of limit u/s 80C, you are left with only few days to consider option best suitable to you, by investing in these you will get deduction u/s 80C from upto Rs. 150000/-. List of some important investment deductible u/s 80C is given below:
- PPF (Public Provident Fund)
- EPF (Employees’ Provident Fund)
- 5 years Bank or Post office Tax saving Deposits
- National Savings Certificates (NSC)
- ELSS Mutual Funds (Equity Linked Saving Schemes)
- Children’s Tuition Fees
- Life Insurance Premium
- Sukanya Samriddhi Account Deposit Scheme
- SCSS (Post office Senior Citizen Savings Scheme)
- Repayment of Home Loan (Principal only)
- Subscription to deposit scheme of a public sector or company engaged in providing housing finance
- Contribution to notified Pension Fund.
- National Pension System
- NABARD rural Bonds
- Contribution to notified annuity Plan of LIC.
Although the cut off date for investment in tax saving instrument is extended upto 31st July 2020 from 31st march 2020. But for some eligible expenses like EPF, employer NPS, child tuition fee and any other item which is bound by financial year, the cut off date is still 31st march 2020, as financial year is not extended.
Decision regarding contribution to NPS u/s 80CCD(1B)
U/s 80CCD(1B) a deduction of Rs 50,000 can be claimed which is over & above the limit of Rs. 150000/- u/s 80C. If you are in 30% Tax bracket then making an contribution to NPS is going to save immediate Rs. 15000/- of your tax. You may decide to open an NPS account if you have not opened earlier or contribute to earlier opened account.
Decision regarding continuity of social security schemes.
If you have chosen to invest in any social security schemes like Public Provident Fund (PPF), National Pension Scheme(NPS) or Sukanya Samridhi Yojana (SSY) etc. which requires a minimum amount to be deposited in every year to keep them active. If you forgot to invest the minimum amount in these schemes, then you have to pay a penalty along with unpaid amount to make the scheme active again. Make sure that you have deposited at least minimum amount before 31st march 2020.
31st March 2020 was last date to file your Income tax return for FY 2018-19 which is now extended to 30th September 2020
If you have not filed your income tax return for financial year 2018-19 or you want to revise your income tax return for 2018-19(only if assessment is not yet completed) then it is last chance for you because 30th September 2020 is the last date to file your belated or revised income tax return for the FY 2018-19
As per section 139(4):-
- upto to FY 2015-16- belated return could be filed at any time before completion of one year from the end of assessment year or before completion of assessment whichever is earlier.
- From FY 2016-17- belated return can be filed at any time before the end of assessment year or before completion of assessment whichever is earlier.(form FY 2016-17, a belated return can also be revised)
As per section 139(5):-
- upto to FY 2016-17- revised return could be filed at any time before completion of one year from the end of assessment year or before completion of assessment whichever is earlier.
- From FY 2017-18- revised return can be filed at any time before the end of assessment year or before completion of assessment whichever is earlier.
Payment of tax liability including Advance tax.
If your tax liability is more than Rs. 10000/- then make sure that you have paid all tax dues as advance tax. If any sum is pending make sure that it is deposited before 31st march 2020 to reduce your interest liability u/s 234B & 234C. For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy,STT, CTT made between 20th March 2020 and 30th June 2020, reduced interest rate at 9% instead of 12 %/18 % per annum ( i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.
Furnishing detail of other income and Investment to your Employer
Salaried Individuals are required to furnish their details of other income and Investment to their employer so that this detail is considered by your employer while deducting tax at source. Different employer provides different time limit for furnishing such detail. But employer may consider your detail, before deducting tax at source in respect of last month of financial year i.e. march-2020 depending on procedures required to be followed. If you have not furnished such detail to employer then ask your employer and do it immediately. Due date for issuance of Form 16 by employer is also extended to 15th August 2020 for FY 2019-20
Decision regarding other deduction available u/s 80D, 80DDB etc.
U/s 80D , If you paid your Health insurance premium for mediclaim policy for Self, Spouse or dependent children is tax deductible upto Rs 25,000. If any one of the persons specified is a senior citizen and Mediclaim Insurance premium is paid for such senior citizen then the deduction amount now is Rs. 50,000. Additional deduction for Health Insurance premium paid for parents is tax deductible upto Rs 25,000. If your parents are senior citizens then the maximum allowable deduction is Rs 50,000. In case, both taxpayer and parent(s) are 60 years or above, the maximum deduction available under this section is up to Rs.1 lakh.
U/s 80DDB, A deduction Rs. 40,000/- or amount actually paid on himself or dependent relative for medical treatment of specified disease or ailment, is available. The diseases have been specified in Rule 11DD. In case the individual on behalf of whom such expenses are incurred is a senior citizen, the individual or HUF taxpayer can claim a deduction up to Rs 1 lakh. Until FY 2017-18, the deduction that could be claimed for a senior citizen and a super senior citizen was Rs 60,000 and Rs 80,000 respectively. This has now become a common deduction available upto Rs 1 lakh for all senior citizens (including super senior citizens) unlike earlier.For example, If person is under 20% slab rate who will be under 30% slab next year.
Ensure that you have you have done respective expenditure/investment to claim deduction under chapter-VI-A.
Additional 15% Depreciation on vehicles purchased upto 31st March 2020 as Supreme Court bans sale of BS-IV vehicles in India from 1st April 2020
The Supreme Court has ordered a ban on sales of vehicles compliant with BS-IV emission norms in India starting 1st April 2020. Bharat Stage-IV emission norms came in to force in India on 1st April 2017, which was also the apex court’s deadline for a ban on BS-III compliant vehicles. Bharat stage emission standards are standards instituted by the government to regulate the output of air pollutants from motor vehicles. The decision, taken by a three-judge bench headed by Justice Madan B Lokur, implies that only BS-VI compliant vehicles will be sold in the country starting 1st April 2020.
All BS–IV vehicles purchased upto March 2020 will remain operational for their entire period of registration, the Finance Minister said at a press meet on 24th August 2019. An additional 15 percent depreciation will be provided on vehicles acquired from 24th august 2019 to till March 2020, taking the total depreciation to 30 percent. Hence business house may take a decision to buy a vehicle before 31st march 2020.