Providing a much-required relief, the government recently exempted tax on costs incurred during COVID-19 treatment of an employee—borne by employers or any other person—for FY20 and subsequent years. The limit for such tax-exempted compensation is Rs 10 lakh.
“The exemption will be allowed without any limit for the amount received from the employer and the exemption will be limited to Rs 10 lakh in aggregate for the amount received from any other persons,” the notification issued by the government said.
Simply, in the time of the pandemic, many people received financial support from their friends, employers, or their well-wishers to bear the expenses incurred for the treatment of the COVID-19.
As per the general provision of income tax law, the money received in such a scenario is taxable after fulfilling certain conditions which is again a financial burden for taxpayers.
However, after the new announcement, no tax liability will arise for the amount received by taxpayers from any person for medical treatment of COVID-19 which was much-needed tax relief at this time, said Abhishek Soni, Co-founder and CEO, Tax2win.in.
Welcoming the move, Archit Gupta, CEO, ClearTax also said, “Covid deaths have led to people coming together and donating money on several crowdfunding platforms. With this announcement, the government has exempted receipts by family members on account of COVID-19 deaths. This is a welcome move and will serve well to protect the interests of those who lost an earning member.”
Additionally, those claiming exemption under capital gains via section 54 and Section 54GB can heave a sigh of relief as due dates for deposits to capital gains accounts of investing the money via acquisition/purchase, etc have also been extended to September 30, 2021.
“This is a much-needed relief for taxpayers who could take required actions to save tax on capital gains due to lockdowns in several states,” said Soni.
Apart from the above relief, the government has also extended a few deadlines as well.
The last date of issuance of Form 16 by the employer has been extended from July 15, 2021, to July 31, 2021, and the last date of Aadhar PAN linking has been extended to September 30, 2021.
The last date of TDS return for Q4 of FY2020-21 was May 31, 2021, which was extended till June 30, 2021, now it is further extended till July 15, 2021.
According to Tax2win’s Soni, the impact of the extension of TDS return will be on Form 26AS as well. If the TDS return will be filed by July 15 then Form 26AS will get updated after filing the TDS returns only.
(Edited by : Ajay Vaishnav)