The COVID-19 pandemic has hit everyone hard especially when it came to personal finances and salaries. The central government and the finance ministry did their best to help out by extending the various Income Tax compliance deadlines, including extension in the date for filing ITR (income tax return) for FY19 as well as linking one’s PAN with Aadhaar.
The government further extended the date for making various investment or payment for claiming deduction under Chapter-VIA-B of the Income Tax Act, which includes section 80C (PPF, LIC, NSC etc.), section 80D (Mediclaim), and section 80G (Donations) among others. As a result of this, one will now be able to make investment or payment up to July 31, 2020 for claiming deductions under the various sections for the Financial Year 2019-20.
The deadline extension would be a boon for those taxpayers who for some reasons are yet to make adequate investments for claiming deductions under the various sections of the Income Tax Act.
Financial planners say that a lot of tax-saving activity happens at the financial year-end, which is exactly when the whole country went into a lockdown. Therefore, “it was no longer possible for many people to make tax-saving investments before the March 31 deadline. Thankfully, that deadline has been extended. This will allow taxpayers to make the investments necessary to save taxes for the previous financial year. Thankfully, there are many tax-saving avenues, including investments as well as insurance,” Adhil Shetty, the CEO of BankBazaar.com, was quoted as saying by FE Online.
However, while saving money or making any investment, taxpayers need to keep the following points in mind.
One, ensure everyone in your family has health insurance coverage. If you don’t, buy your base policy. If you do, consider a super top-up coverage to improve your coverage. This will protect your finances against future hospitalisations.
Secondly, buy adequate life insurance. With an ongoing pandemic, there’s great uncertainty over life expectancy, and one would need your dependents to be okay in case of your untimely demise. A term insurance can help you achieve this goal.
Also one can continue claiming deductions for your contributions to NPS Tier 1 schemes. With this, you can avail deductions up to Rs 50,000 over and above the 80C limit of Rs 1.5 lakh.
