The government recently announced an extension in the tax filing deadline. For FY 2019-20, it has been extended from 31st July 2020 to 30th November 2020. Prior to this, various income tax-related deadlines were extended from 31st March 2020 to 30th June 2020.
Those who had missed making adequate investments for tax saving until the previous deadline have been given a second chance. This extension can be beneficial for both salaried and self-employed individuals.
The Insurance Regulatory and Development Authority of India (IRDAI) has also increased the grace period for life insurance policies whose premium was due in March 2020. Policyholders can now pay their premium, until 30th June 2020, if not paid already. Only premiums due between 20th February 2020 to 31st March 2020, have been allowed this extension.
Here are 5 things to know about the new tax deadlines:
- If your life insurance policy renewal date is between 20th March 2020 to 31st March 2020 and you make the premium payment in Quarter 1 of FY 2020-21, that is between April’20 to June’20 the premium amount will be eligible for deduction from taxable income in FY 2019-20.
- For renewal dates of 1st April 2020 onwards, the premium will be eligible for deduction in FY 2020-21.
- A new policy bought between 1st April 2020 and 30th June 2020, shall be allowed for tax deduction for FY 2019-20. This is applicable only if there is a shortfall of investments in FY 2019-20. The policy could be a term life insurance plan, ULIP, or a guaranteed returns plan.
- Many times, individuals are unable to invest under Section 80C optimally. There could be a deficit of say ₹25,000 – ₹30,000 in one’s investments under 80C. One can cover this deficit by investing in Q1 of FY 2020-21.
- In case you have a shortfall in FY 2019-20, you cannot allocate just a part of the premium paid in Q1 of FY 2020-21. In such cases, you can choose a monthly or quarterly mode of premium payment.
For those of you who would like to use this opportunity and save tax, we would suggest you have a look at CRISIL ranked no.1 ULIP, Edelweiss Tokio Life Wealth Secure+.
To summarize, this extension of tax and life insurance premium deadline can be of great value to many. Taxpayers and policyholders who were lagging on paying their dues can now have relief of 3 months.