June 26, 2021 12:50 PM
No Tax on Covid-related aid for recipients, says FinMin, The government won’t levy any income tax on financial aid received by an individual from an employer or others for treatment of covid-19, the finance ministry said on Friday. In addition, any financial assistance received by family members of a person who has died from the viral disease will not be subject to income tax.
The ministry also announced time extensions for various statutory obligations of taxpayers including for linking permanent account number (PAN) with Aadhaar and for employers to issue tax deducted at source statements to staff.
For aid received by family members of a deceased person, the tax relief will be applicable up to Rs 10 lakh if it is given by any person other than the employer of the deceased. Financial assistance offered by an employer, however, won’t have any cap on the tax exempted amount.
No Tax on Covid-related aid for recipients, says FinMin, Both the measures are applicable for FY20 and subsequent years, and the Income Tax Act will be amended to provide for this relief.
The ministry explained that employers and well-wishers of taxpayers who lost their lives to covid had extended financial assistance to their family members to help them cope with difficulties from the sudden loss of the earning member of the family. The tax exemption will offer relief to these families.
Experts said the measures offer significant relief. “Though the relief is granted retrospectively from FY20 onwards, since the due date for filing income tax return for FY20 has already expired, it would be important to see, whether the government revives the time limit for filing tax returns for FY20,” said Shailesh Kumar, partner at Nangia and Co LLP, a consultancy.