How TDS & Refunds would be impacted due to extended deadline of 30th June for tax saving invest
How TDS & Refunds would be impacted due to extended deadline of 30th June for tax saving investments.
As businessman pays advance tax as he/she earns income, employer is supposed to deduct tax at source from employees’ salary during the financial year.
Last salary of financial year is usually received in the month of March. Before this last salary is transferred by employer to your account, you are supposed to do your tax planning and submit tax saving investment details to employer. This helps employer to deduct less tax at source (TDS) and employee get more cash in hand.
Planning is hardly done in perfection. And moreover after 31st March, our chance of tax saving is usually gone. This year situation is different. In view of lockdown, government has come up with certain relaxation to tax payers. One of them is that tax saving investment for financial year 2019-20 can be done till 30th June 2020.
What does it mean? It means if I have not yet done complete tax planning and I have missed on certain tax saving investment, then I have option of doing this tax saving investment till 30th June 2020 and claim this deduction. Let’s explain this with example. You have planned investment in NPS of ₹ 50,000 but You missed it to do before 31st March. Now you have option to do it till 30th June 2020, and claim deduction for FY 2019-20. Only care you need to take is that you should ensure this deduction is not availed again for FY 2020-21. This option of investment till 30th June 2020 is available for all tax saving instruments like 80C investments, health insurance u/s 80C, NPS etc.
Now next questions comes in our mind is this; “I don’t have any money saved from my salary of FY 2019-20. So I can only invest from my salary for month of April 2020 to June 2020. Now can l still use this tax saving investment for saving tax for FY 2019-20?” You should not worry at all. You can still claim those investments for saving tax for FY 2019-20.
Now last query in our mind is about TDS already done by your employer. Yes. Your employer has already done TDS without considering these extra tax saving investments which you are planning now. So now you will receive refund from Income Tax Department to the extent of taxes saved due to these tax saving investment. In the nutshell, please revisit your working of income for FY 2019-20 and ascertain space available for saving tax and do investments accordingly. You get the refund after filing of return before due date.