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Income Tax Exemption for Expenditure on Covid Treatment

Income Tax Exemption for Expenditure on Covid Treatment

To provides relief to taxpayers amid the second wave of the Covid-19 pandemic, the Central Board of Direct Taxes has announced an income-tax exemption for Expenditure on Covid Treatment vides a Press Release dated 25th June 2021.

With this notification, CBDT announced that any amount spent by anyone for the treatment of an employee or someone else would become free from taxation.

This means the individual who pays for the treatment and the beneficiary of the payment will not face tax liability.

The exemption will be allowed without any limit for the amount received from the employer. Further, the exemption shall be limited to Rs 10 lakh in aggregate for the amount received from any other persons.

Synopsis of Notification

The CBDT has announced that any financial assistance received by a taxpayer for Covid treatment will be totally tax-exempt.  Those who have received financial support from their employers, friends for Covid-19 treatment, will not have to pay tax for the amount.

  • The CBDT has exempted tax on costs incurred during COVID treatment of an employee – borne by employers or any other person for FY 2020.
  • The Government has also extended deadlines for several income tax compliances.
  • Additionally, ex-gratia payments received from employers by the families of employees who lost their lives to COVID-19 would be exempt from income tax in FY20 and subsequent years

Income Tax Exemption for Expenditure on Covid treatment

Many taxpayers have received financial help from their employers and well-wishers for meeting their expenses incurred for treatment of Covid-19.

In order to ensure that no income tax liability arises on this account, CBDT decided to provide an income-tax exemption to the amount received by a taxpayer for medical treatment from the employer or from any person for treatment of Covid-19 during FY 2019-20 and subsequent years.

Income Tax Exemption for Ex-Gratia Received on Death due to Covid

Certain taxpayers have lost their life due to Covid-19. In order to provide relief to the family members of such taxpayer, CBDT has decided to provide an income-tax exemption to ex-gratia payment received by family members of a person from the employer of such person or from another person on the death of the person on account of Covid-19.

Further financial assistance extended by an employer in the event of death of an employee due to Covid is totally exempt; assistance received from others is tax-exempt up to a total of Rs.10 lakh. These benefits are available for FY 2019-20 and beyond

Extension of Due Date for Several Income Tax Compliances

The Central Board of Direct Taxes, Government of India provides further relief to taxpayers during the prevailing COVID-19 outbreak by extending timelines of certain compliances. CBDT announced the extension of due dates of 18 types of income-tax compliances from June 30th, 2021 to various dates vide Notifications dated 25th June 2021.

Click here to know more about the Extension of Due Dates of 18 Income-Tax Compliances

The official notification of CBDT is attached here for reference.