COVID-19 related tax exemptions: Government notifies conditions | What you need to know

The central government has notified conditions for tax exemption of sums received for COVID-19 treatment or on the demise due to coronavirus. 

The three notifications issued by the Centre cover sums received from an employer or any other person for medical treatment of COVID-19 or related illness by the recipient for himself or his family member, and also the sum received by the family member on account of death due to COVID-19.  

The Notifications are deemed to be effective from Apr 1, 2020 and apply to AYs 2020-2021 and subsequent AYs. 

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सरकार ने नोटिफिकेशन जारी किया#COVID19 | #DeathCompensation | #TaxFree | @pandeyambarish pic.twitter.com/Z315wjmBih

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Earlier, the Central Board of Direct Taxation (CBDT) had announced that any amount spent by anyone for the treatment of an employee or someone else would become free from taxation. 

In June 2021, the finance ministry had announced that no income tax will be charged on the amount received by a taxpayer from her employer for COVID-19 treatment expenses, news agency Reuters had reported.  

Likewise, if you have received financial assistance from someone else, that amount too will not be taxed. In addition, in case a deceased COVID-19-affected individual’s family members have received any ex-gratia payment from her employer or anyone else, the amount will also be exempt from tax. 

Earlier, this is what CBDT notification entailed  

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