Providing Tax Relief In These Troubled Times
By Ashwini Agarwal
First publised on 2021-06-27 08:07:12
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In an excellent move, the government has decided to provide tax relief for those who received help from their employers or others for Covid-19 treatment and also for family members who received ex-gratia payment in case of Covid related deaths.
Since there was no clarity on the tax treatment of such amounts, employers were in a fix whether to withhold tax on the same. Several individual taxpayers and tax professionals had made representations to the government to make it tax free as a humanitarian gesture.
The government has decided that in case of ex-gratia payment received, no tax will be charged on the amount regardless of the sum if received from employers and only the amount above Rs 10 lakh will be subject to tax if received from others.
This is likely to benefit a large number of taxpayers, and in case of death, their families. Any amount received to offset the expenditure made in combating Covid-19 must not be subjected to tax as the pandemic has caused immense hardships to people. Covid-19 treatment is costly and any relief is welcome.
The relief is being allowed from FY 2019-20 onwards. Hence, in case of taxpayers who have already filed their tax returns for the relevant period and do not have the option of filing a revised return, the government will have to come out with guidelines on how they can claim the exemption now granted if they have shown the amount as taxable. The CBDT must come out with a clarification regarding this at the earliest.
Some tax experts have also asked for clarifications in case of amount received for post-Covid complications such as black fungus. The CBDT must clarify whether payment received for treatment of post-Covid treatment will also be exempt. In short, tax authorities must come out with a detailed instruction sheet to guide tax payers and professionals.
