Covid relief: No income tax on financial aid for treatment; exemption to ex-gratia received by kin of deceased

It also extended the due date of various compliances, including the last date of linkage of Aadhaar with PAN from June 30 to September 30, 2021, as well as last date for payment under Vivad se Vishwas by 2-4 months.

Given the severe impact of the second wave of the Covid pandemic on the economy, the Union government on Friday announced income tax exemptions to financial aids received by people for Covid treatment. It also gave tax exemption to ex-gratia received by the kin of the deceased – if the succour is received from employers, the exemption is available without any upper limit and if received from others, the waiver will be available for up to Rs 10 lakh.

It also extended the due date of various compliances, including the last date of linkage of Aadhaar with PAN from June 30 to September 30, 2021, as well as last date for payment under Vivad se Vishwas by 2-4 months.

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, it has been decided to provide income tax exemption to the amount received by a taxpayer for medical treatment from employer or from any person for treatment of Covid-19 during FY20 and subsequent years,” the Central Board of Direct Taxes (CBDT) said in a statement.

“It has been decided to provide income tax exemption to ex-gratia payment received by family members of a person from the employer of such person or from other person on the death of the person on account of Covid-19 during FY20 and subsequent years. The exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to Rs 10 lakh in aggregate for the amount received from any other persons.”

Necessary legislative amendments for the above decisions shall be proposed in due course of time, it added.

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. Among a host of due date extensions, the CBDT extended the last date of linkage of Aadhaar with PAN under, which was earlier extended to June 30, 2021 is further extended to September 30, 2021.

The last date of payment of amount under Vivad se Vishwas (without additional amount) which was earlier extended to June 30, 2021, is further extended to August 31, 2021. Last date of payment under Vivad se Vishwas (with additional amount) has been notified as October 31, 2021.