New Delhi: In another relief to taxpayers affected during the second wave of coronavirus, the central government on Friday announced tax exemption for expenditure on COVID-19 treatment during the financial year 2019-20 and subsequent years.
Also, the government has said that tax exemption will be given to those people who have received or even given ex-gratia amount on death due to COVID-19.
As per the announcement, ex-gratia payments received from employers by family members in case of death of employees due to coronavirus will be exempt from income tax in the financial year 2019-20 and subsequent years.
The limit for such tax-free payment on receipt from any other person will be Rs 10 lakh.
“The exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to the aggregate amount of Rs 10 lakh for the amount received from any other person,” the notification issued by the government said.
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Making the announcement, Anurag Thakur, Minister of State in the Ministry of Finance, said: “Amounts paid by an employer or any other person for the treatment of an employee in 2019-20 and thereafter will not be taxed.”
With this declaration, any sum spent by an individual for the treatment of an employee or any other shall become exempt from taxation. This means, any person who has paid for the treatment and the beneficiary of the payment will not face tax liability.
The Central Board of Direct Taxes (CBDT) said in a statement, “The relief is being provided to ease the compliance burden of the taxpayers during this difficult time…”
“In order to ensure that no income tax liability arises on this account, it has been decided that during the financial year 2019, the amount received by the taxpayer for medical treatment from the employer or any person for treatment of COVID-19 shall be Income tax exemption to be provided for -20 and subsequent years,” it added.
Additionally, the government has also extended the PAN-Aadhaar linking deadline by three months to September 30, 2021, while the employers have to furnish Tax Deduction at Source (TDS) certificate in Form 16 to employees. From 31st July, 15th July, 2021.
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