In order to encourage contributions for the fight against the coronavirus pandemic, the Centre has decided to make all donations towards the newly established PM-CARES Fund eligible for 100 percent tax deduction. The fund was announced by Prime Minister Narendra Modi last week and it invites individual contributions, no matter how small they are.
With the promulgation of the Ordinance, the last date for filing income tax returns for 2018-19 as well as that for linking PAN with biometric ID Aadhaar has been extended by three months to June 30.
Here are the key highlights of the Ordinance:
1) The ‘Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020’, which got the assent of the President on Tuesday, also amends a provision in the Income Tax Act to allow 100 percent deduction on donations to the PM-CARES Fund. According to a government statement, the Ordinance “also amended the provisions of the Income-tax Act to provide the same tax treatment to PM-CARES Fund as available to Prime Minister’s National Relief Fund. Therefore, the donation made to the PM-CARES Fund shall be eligible for a 100 percent deduction under section 80G of the IT Act”.
2) “The limit on the deduction of 10 percent of gross income shall also not be applicable for donation made to PM-CARES Fund,” an official statement said.
3) As the date for claiming deduction under Chapter-VIA-B of IT Act which includes Section 80C (LIC, PPF, NSC, etc.), 80D (Mediclaim), 80G (Donations) has been extended up to June 30, 2020, the donations made till then shall also be eligible for deduction from income of FY20.
Hence, “any person, including corporate, paying concessional tax on the income of FY 2020-21 under new regime can make a donation to PM-CARES Fund up to June 30 and can claim deduction u/s 80G against income of FY 2019-20 and shall also not lose his eligibility to pay tax in concessional taxation regime for the income of FY 2020-21”, the statement said.
3) The date for making an investment, construction or purchase for claiming rollover benefit or deduction in respect of capital gains under sections 54 to 54GB of the IT Act has also been extended to June 30, 2020. Therefore, the investment or purchase made up to June 30, 2020, shall be eligible for claiming deduction from capital gains arising during FY 2019-20.
4) With this Ordinance, the date for the passing of order or issuance of notice by the authorities under various direct taxes and ‘Benami’ law has also been extended till June 30. It also puts into effect the government’s decision to extend durations of the dispute settlement schemes for direct taxes (Vivaad Se Vishwas) and indirect taxes (Sabka Vishwas) till June 30.
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