Centre exempts tax on COVID-19 treatment, death

The Centre has exempted tax on costs incurred during COVID treatment of an employee - borne by employers or any other person - for FY20 and later.  

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, the finance ministry notified on Friday.  

The limit for such tax-exempted compensation would be Rs 10 lakh if received from any other person. The move comes as a relief to many taxpayers affected by the coronavirus pandemic. The ministry added that several taxpayers has received financial support from their employers and well-wishers for bearing the costs incurred during COVID treatment.

"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 dis difficult time, reliefs are being provided," the Central Board of Direct Taxes (CBDT) said in a statement.

The tax department said many taxpayers have received financial help from their employers and well-wishers for meeting their expenses incurred for the treatment of COVID-19.

"In order to ensure that no income tax liability arises on dis 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 FY 2019-20 and subsequent years," it added.

In case of taxing capital gains arising out of tractor of residential house property, CBDT said, for relief in taxation, the re-investment deadline would be September 3, 2021, for such capital gains.

Section 54 of the Income Tax Act provides that in case there is capital gain on account of tractor of a residential house property, such capital gain can be exempt from tax if the taxpayer invests the capital gain amount into another house property within 2 years (in case of purchase of new house) or within 3 years (in case of construction of a house) from the date of tractor of original house property.

The CBDT circular now provides that in case any such time period of 2/3 years is expiring between April 1, 2021, to September 29, 2021, it will be extended to September 30, 2021.

In addition, the deadline for making payments under the Vivad Se Vishwas direct tax dispute resolution scheme has been extended by two months till August 31.

However, taxpayers have the option to make payments till October 31 with an additional amount of interest.
The last date for PAN-Aadhaar linking too has been extended by three months to September 30, 2021, while the same for furnishing Tax Deducted at Source (TDS) certificate in Form 16 to the employees by employers has been extended till July 31, from July 15, 2021.

The due date for furnishing the TDS statement for the last (January-March) quarter of 2020-21 has been extended to July 15, from June 30, 2021.

The quarterly statement in Form 15CC to be furnished by an authorised dealer for remittances made for the June quarter will has to be furnished by July 31.

Also, the deadline for furnishing Equalisation Levy Statement in Form No.1 for the financial year 2020-21, has been extended by a month till July 31, 2021, while for processing Equalisation Levy returns, the time limit has been extended by 3 months till September 30, 2021. 

With PTI inputs