The income tax returns notified for the AY 2020-21 (FY 2019-20) allow a taxpayer to claim deduction or exemption for investments, payments and expenditure incurred during the period 1 April 2020 until 30 June 2020. The schedule DI is in line with the announcement of extending tax deduction benefits beyond the expiry of the financial year 2019-20 ending on 31 March 2020. The period for entitlement of the benefits stands further extended until 31 July 2020. The income tax returns will be updated to incorporate the last date for tax saving.
1. What is schedule DI in the income tax return?
Due to COVID-19, the government extended the benefit of claiming tax deduction/exemptions expiring on 31 March 2020 until 30 June 2020 (further extended to 31 July 2020). Accordingly, a separate schedule DI requires taxpayers to provide the details of the investment or payments or expenditure for which they wish to claim a tax deduction or exemption.
The claim for deductions and exemptions under schedule DI is part of the claims a taxpayer can make for the period 1 April 2019 and 31 March 2020. However, the aggregate deduction cannot exceed the yearly limit applicable to the FY 2019-20.
2. Tax deductions you can claim in schedule DI
You can claim the following tax deductions in schedule DI:
- Deductions for tax-saving investments under section 80C, 80CCC and 80CCD.
- Deduction for payments such as medical insurance and expenses under section 80D, 80DD and 80DDB.
- Interest on housing and other eligible loans under section 80E, 80EE, 80EEA and 80EEB.
- Donations under section 80G, 80GG, 80GGA and 80GGC.
3. Tax exemptions you can claim in schedule DI
You can claim the capital gains tax-exemptions by investing the proceeds or the capital gains in another eligible asset. The exemptions allowed are under section 54, 54B, 54F, 54EC and other eligible exemptions. The last date to make the investments stands extended to 30 September 2020.
4. Who can claim tax benefits for FY 2019-20 in schedule DI
In general, a taxpayer gets time until the end of a financial year to make the tax-saving investments or deposits. Due to the spread of COVID-19, the government enforced a lockdown across the country. Hence, to provide relief to taxpayers, the time expiring between 20 March and 30 July 2020 was extended until 31 July 2020. Schedule DI enables taxpayers to claim deductions for investments made in the extended period until 30 June 2020.
In the case of capital gains exemptions, a taxpayer gets a definite time to make the capital gains investment. The time allowed to make an investment or construct or purchase a house may be expiring under various sections. Hence, in cases where the time was expiring between 20 March and 29 September 2020, the government extended the time until 30 September 2020.
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