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You may have to claim refund for FY2019-20 tax saving done after March 31

The government has extended the deadline to complete tax-savings to June 30, 2020, via an ordinance dated March 31, 2020. However, this might lead to individuals filing ITR to claim excess tax deducted from their salary income.

, ET Online|
Last Updated: Apr 08, 2020, 06.39 PM IST
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Employers are required to file TDS return and issue them Form 16 (TDS certificate) by May 31 and June 15 respectively.
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The government has extended various tax-related deadlines for the financial year 2019-20 to June 30, 2020 (from March 31, 2020). These include the deadline for completing one's tax-saving exercise.

According to a finance ministry press release issued on March 31, "The date for making various investment/payment for claiming deduction under Chapter-VIA-B of Income-tax Act, 1961 which includes Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations), etc. has been extended to 30th June, 2020. Hence the investment/payment can be made up to 30.06.2020 for claiming the deduction under these sections for FY 2019-20."

However, one must remember that extension of tax-saving deadline to June 30, 2020 does not mean that government has extended the financial year. The financial year 2019-20 ended on March 31, 2020, and a new financial year has started from April 1, 2020, onwards.

According to chartered accountants and tax experts, individuals making tax-saving investments in the months of April, May and June, 2020 are unlikely to be able to claim deduction from their salary income to reduce TDS. This is because full tax due on this income would most likely have already been deducted via TDS by the employer in March 2020 itself. This would result in the TDS by employer being higher than what it should have been had the deduction been taken into account before the TDS.

Once the tax saving investment is made in the month of April, May, June, 2020 then the deduction for the same can be claimed while filing one's income tax return.

Remember excess tax deduction from salary income can be adjusted against tax payable on a person's other taxable incomes. Interest received from fixed deposits, recurring deposits etc. are some examples of other income which is taxable in the hands of an individual.

Therefore, an individual will first have to calculate total income which is taxable and then total tax liability on it. Once the total tax liability is known then TDS on salary can be adjusted against the total tax liability. If a person has other taxable income in addition to salary then the excess TDS can be adjusted against tax payable on this other income.

If the TDS on salary income is in excess of total tax liability (after claiming eligible deductions at the time of filing ITR) on salary and other incomes then the individual will have to claim refund from the tax department in his/her income tax return.

Abhishek Soni, CEO and founder, Tax2win.in, an ITR filing website says, "Though the individuals have additional three months to complete their tax-savings for FY 2019-20, however, any tax-savings done during these months might not lead to lower deduction of tax from their salary incomes. Therefore, it is likely that an individual would have to claim refund for excess tax deducted at the time of filing ITR."

Normally, employers are required to file TDS return for the TDS deducted from employees' salaries and issue them Form 16 (TDS certificate) by May 31 and June 15 respectively.

Soni says, "Even if the TDS return deadline and date to issue Form-16 is extended by the government, this will not make an impact as the tax from an employee's salary income for FY 2019-20 would have already been deducted by his/her employer in the month of March."

Chartered accountants say that there is confusion about whether the notification dated March 31, 2020 has extended the deadline to file TDS return by employers and thereby for issuing Form-16 as well.

Chartered Accountant Naveen Wadhwa, DGM, Taxmann.com says, "By the reading of Ordinance dated March 31, 2020, it may be concluded that the government has extended the deadline of TDS return and Form-16 to June 30, 2020, from their earlier respective date of May 31, 2020, and June 15, 2020, respectively. Therefore, individuals will get their Form-16 by June 30, 2020, only. However, more clarity will come when the government issues the amendment notifications."

Soni says, "The March 31, 2020 ordinance has extended various deadlines by stating the words deadlines between March 20 and June 29, 2020. The government has not amended the different sections of Income-tax Act separately. Therefore, a clarification in this regard would be needed."
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