In an effort to provide relief to the common man amid the second wave of coronavirus Pandemic, the Central Board of Direct Taxes (CBDT) has extended various deadlines related to income tax returns. The CBDT on Friday said that those who have received financial assistance from their employers, friends for the treatment of COVID-19, will not have to pay tax for this amount.
“Many taxpayers have received financial help from their employers and well-wishers to meet their expenses incurred for the treatment of COVID-19. In order to ensure that no income tax liability arises on this account, it has been decided to provide income tax exemption on the amount received by the taxpayer for medical treatment from the employer or any person for the treatment of COVID-19 during the financial year 2019. in the 20s and beyond,” the regulator said in a statement.
Ex-gratia payments received by the family members of a person who dies due to COVID-19 from an employer will be exempted from tax without any limit. For amount received from any other person such as friends and family, the tax exemption will be limited to Rs 10 lakh.
“Unfortunately, some taxpayers have lost their lives due to COVID-19. The employers and well-wishers of such taxpayers had provided financial assistance to their family members to tide over the hardships arising out of the sudden departure of the earning member of their family. In order to provide relief to the family members of such taxpayer, it has been decided to provide income tax exemption on ex-gratia payments received by the family members of such person from the employer of such person or on the death of other person. Persons due to COVID-19 during the financial year 2019-20 and subsequent years. Exemption will be allowed without any limit for amount received from employer and exemption will be limited to Rs.10 lakh in aggregate for amount received from any other person.
This new step will bring a big relief to those taxpayers who have been badly affected by the corona virus. “Necessary legislative amendments to the above decisions will be proposed in due course of time,” the CBDT said.
Prateek Bansal, Associate Partner, White & Brief Advocates and Solicitors said that income tax exemption on taxpayers or family members receiving monetary assistance from employer or any other person for COVID-19 treatment is a welcome decision.
“The said amount of monetary assistance should accordingly be allowed as deduction from the taxable income of the employers or such other persons. Further, since the exemption is given only for medical treatment or death due to COVID, proper documents or records should be maintained by the taxpayers,” Bansal said.
“The announcement provides significant relief to the beneficiaries of the Covid relief. Any financial assistance received by the taxpayer for the treatment of COVID will be completely tax free. These benefits are available for FY 2019-20 and onwards,” said Saraswati Kasturirangan, partner, Deloitte India.
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