Centre exempts tax on expenses incurred for Covid-19 treatment

This exemption is applicable to any amount paid by the employer, and limited to Rs 10 lakh if received from any other person, the finance ministry notified


Coronavirus | Health expenditure | Finance Ministry

The Centre on Friday exempted tax on expenses incurred on Covid treatment of an employee — borne by employers or any another person — for FY20 and later.

This exemption is applicable to any amount paid by the employer, and limited to Rs 10 lakh if received from any other person, the finance ministry notified.

The move comes as a relief to hundreds of taxpayers affected by the pandemic.

The ministry said many taxpayers have received financial help from their employers and well-wishers for meeting expenses incurred on Covid treatment.

“In order to ensure no income tax liability on this account, it has been decided to provide income-tax exemption to the amount received by a taxpayer for medical treatment from an employer or from any person, for treatment of Covid-19, during FY20 and subsequent years,” the finance ministry said.

The government added that any ex-gratia amount, received by family members of individuals who died due to Covid, would be exempt from income tax.

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“Unfortunately, certain taxpayers their lives due to Covid-19. Employers and well-wishers of such taxpayers had extended financial assistance to their family members so they could cope with the difficulties arising out of the sudden loss of an earning member of their family,” it said.


Besides tax exemptions, the ministry has also provided relief on various tax compliance measures, and extended deadlines for the same.

“In view of the impact of the Covid-19, taxpayers are facing inconvenience in meeting certain compliances, and also in filing a response to various notices. In order to ease the compliance burden of taxpayers, relief is being provided,” said the ministry.

The most important extension involves linking of PAN and Aadhaar, the deadline for which is now September 30.

Besides, the time to invest in residential property for tax deduction has been extended by more than three months, while the due date for Vivad se Vishwas payment (without interest) has been extended by two months to August 31.

Furnishing of the statement of equalisation levy has also been extended by a month until July 31. Time limit for both passing the assessment order and issuing the penalty order has been extended until September 30.

Objections to the Dispute Resolution Panel (DRP) can now be done by August 31, while the Statement of Deduction of Tax for the last quarter of FY21 may be furnished on or before July 15.

Compliances by taxpayers, such as investment, deposit, payment, acquisition, purchase, construction, or such other action can now be done on or before September 30.

Quarterly statements with respect to remittances made for the quarter ending June 30 may now be furnished on or before July 31.

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