As per the CBDT announcement, while filing income tax returns, taxpayers can claim the tax exemptions and deductions for COVID treatments. Any amount paid by the employer is also included in the exemption and is limited to Rs. 10 lakhs if received from anyone as financial help for the COVID treatment.
Financial Relief by CBDT
In the case of COVID-19 deaths, ex-gratia received from the employer for employee’s families have been exempted from being taxed. For individuals who have received financial help from their friends and families, the exemption has been granted up to a limit of Rs 10 lakh.
To ensure no income tax liability, the finance ministry has decided to provide tax exemption for the amount received by a taxpayer for medical treatment from the employer or from a well-wisher, during FY20 and subsequent years.
Tax Deductions for COVID Health Insurance
Tax deductions can be claimed against the premium paid for health insurance policy under Section 80D up to Rs 25,000. In this section, health insurance policies purchased to cover COVID-related expenses are also included.
Relief on Tax Compliance Measures
Other than tax exemptions, the Finance Ministry has provided relief on various tax compliance measures and deadlines have been extended. Due to the impact of COVID-19, taxpayers may face inconvenience in completing certain compliances and filing various notices in time. To make the compliance burden easier for taxpayers, the finance ministry has provided these relief measures.
- The last date to link PAN and AADHAAR has been extended to September 30, 2021.
- The time to invest in residential property for tax deduction has been extended by three months.
- The due date for Vivad se Vishwas payment has been extended to August 31, 2021.
- Furnishing of the statement of equalization levy has been extended to July 31, 2021.
- The time limit for passing the assessment order and issuing the penalty order has been extended till September 30, 2021.
- Objections to the Dispute Resolution Panel have to be done by August 31, 2021.
- The statement of Deduction of Tax for the last quarter of FY21 may be furnished on or before July 15, 2021.
- Compliances by taxpayers such as investment, deposit, payment, acquisition, purchase, construction, or such other actions can be done on or before September 30, 2021.
- Quarterly statements with respect to remittances may now be furnished on or before July 31, 2021.