The government, on Friday, announced Income Tax exemption for expenditure on Covid treatment and ex gratia received on death due to the infection. It also further extended the due date for linking Aadhaar with PAN, besides granting extensions in various compliances.

“Amount paid for medical treatment to an employee by an employer or to a person by any person on account of Covid for FY20 and subsequent year will not be taxed in hands of employee/beneficiary,” said Minister of State for Finance Anurag Singh Thakur. He also mentioned that tax will not be levied on ex gratia received by the family members of an individual who died of Covid.

A statement by the Income Tax Department said that “the exemption shall be allowed without any limit for the amount received from the employer, and the exemption shall be limited to ₹10 lakh in aggregate for the amount received from any other persons,” it said.

Amendments

The department also said that necessary legislative amendments for the above decisions will be proposed in due course of time.

Commenting on these decisions, Shailesh Kumar, Partner at Nangia & Co LLP, said that the move provides the much-needed tax relief to those who have suffered from Covid and received monetary help from their employer, friends and extended families. “Though the relief is granted retrospectively from FY20 onwards, since the due date for filing ITR for FY20 has already expired, it would be important to see whether the government revives the time limit for filing ITR for FY20,” he said.

Compliance

Meanwhile, the Income Tax Department has also announced extension of 18 compliances for individual and businesses. “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, relief measures are being provided,” it said.

Accordingly, the last date for linking PAN with Aadhaar has been further extended to September 30 from June 30. Similarly, the last date for payment under Vivad se Vishwas (without additional amount), which was earlier extended to August 31, can be made with additional amount till October 31.

It also said that the time limit for passing assessment order and penalty order, which was earlier extended to June 30, will now be September 30.

Giving another relief, the Ministry said that compliances to be made by taxpayers such as investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purpose of claiming any exemption under the provisions contained in Section 54 to 54GB of the Act, for which the last date of such compliance falls between April 1 to September 29 (both days inclusive), may be completed on or before September 30.

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