Amounts paid by an employer to an employee or to a person by another for Covid 19 treatment will be exempt from income-tax in FY20 and subsequent years, the government said Friday, giving much needed tax concession to people that may have received financial help from their employers and well-wishers for meeting expenses incurred for treatment of Covid-19.
Ex-gratia payments received by family members of a person who has died due to Covid 19 from an employer will also be tax exempt without any limit. Such a payment from other persons aggregating to Rs 10 lakh will be tax exempt, the Central Board of Direct Taxes (CBDT) announced.
“We have already announced free vaccination drive for everyone above 18 years, today another major decision has been taken. There’s income tax concession for payments towards Covid 19 treatment or death,” said minister of state for finance Anurag Thakur said.
Industry and sector watchers lauded the government’s decision, saying that the exemptions will provide some respite to many affected taxpayers.
“This provides the much needed tax relief to taxpayers, who have suffered from Covid and received monetary help from their employer, friends and extended families, either for treatment of Covid or on account of death of a family member due to Covid,” said Shailesh Kumar, partner at Nangia & Co LLP.
He added that the government may have to revive the time limit for filing income tax returns for FY19-20 since the relief has been granted retrospectively and the due date for filing ITR for FY19-20 has already expired.
“This is a welcome and much needed relief brought in by CBDT. COVID treatment has also turned out to be costly for quite a lot of people,” said Amit Maheshwari, partner at AKM Global.
The government also extended certain compliance deadlines including payments for Vivaad Se Vishwas settlement cases and equalization levy.
Last date for payment of tax without additional amount under Vivad se Vishwas has been further extended August 31, from earlier deadline of June 30. With the additional amount the last date has been notified as October 31.
Time limit for processing equalisation levy returns has been extended to September 30, from earlier deadline of June 30. Equalisation levy statement for FY21 can be filed by July 31 instead of June 30.
Deadline for PAN-Aadhaar linking has been extended to September 30 from earlier date of June 30.
“In view of the impact of the Covid-19 pandemic, taxpayers are facing inconvenience in meeting certain tax compliances and also in filing response to various notices. In order to ease the compliance burden of taxpayers during this difficult time, reliefs are being provided,” the CBDT said Friday.
Deadline for completion of assessment proceedings, completion of penalty proceedings, registration of charitable trusts and institutions for income tax exemption, have also been extended, which will provide additional time to taxpayers as well as tax authorities for meeting the timeline.
Objections to dispute resolution panel (DRP) and assessing officer for which the last date was June 1, or later can be filed by August 31 or later date provided in in Section 144C of the income tax Act.
Statement of deduction of tax for the last quarter of the FY21 required to be furnished on or before May 31, can be filed by July 15 instead of the extended deadline of June 30.
Certificate of tax deducted at source (TDS) in Form 16, required to be furnished to the employee by June 15 can now be filed by July 31, instead of the extended date of July 15.
Statement of income paid or credited by an investment fund to its unit holder in form 64D for the Previous Year 2020-21, can be filed by July 15. In case of Form 64C the extended deadline stands at July 31.
Applications for registration or provisional approval of trusts, institutions and research associations can be made by August 31.
The compliances to be made by the taxpayers such as investment, deposit, payment, acquisition, purchase, construction or such other action for purpose of claiming any exemption for which the last date of such compliance falls between April 1 and September 29, can be done by September 30.
Time limit for passing assessment order which was earlier extended to June 30 now is further extended to September 30. In case of passing penalty order deadline is further extended September 30.
Uploading of declarations received from recipients in Form 15G/15H during the quarter ending June 30, can be uploaded by August 31.
Exercising of option to withdraw pending application filed before the erstwhile Income Tax Settlement Commission may be exercised by July 31.