Tax relief on Covid-19 treatment expenses
13-04-2022 11:55:43
In June 2021, the finance ministry said income-tax will not be charged on the amount received by a taxpayer from her employer for Covid-19 treatment expenses.
Likewise, if financial assistance is received from someone else, that amount, too, will not be taxed. In addition, if a deceased Covid-19-affected individual’s family members receive any ex-gratia payment from an employer or anyone else, the amount will be tax exempt.
There are limits and conditions to avail of the relief. If a deceased employee’s family were to receive the ex-gratia from her employer after her death, no limit applies – the entire amount will be exempt from tax.
However, if someone else pays this amount, tax exemption is limited to Rs 10 lakh. Also, the exemption is valid only if the amount is received within 12 months from the date of death. If the family receives financial support from many people, the aggregate amount up to Rs 10 lakh will be tax-free. This amendment is applicable retrospectively from assessment year 2020-21.
