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No tax on Covid-related aid for recipients, says FinMin
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 said.
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 said.
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 ₹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.
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 loss of the earning member of the family.
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.
The other compliance relief measures announced on Friday will provide extra time to taxpayers and authorities for meeting the deadline, he said. For linking PAN and Aadhaar, the deadline has been extended by three months till September 30.
Also, businesses will now have time till July-end to issue their tax deducted at source statements in Form 16 to their workers. The earlier due date after one extension was July 15.
Individuals claiming capital gains tax exemption from the sale of residential property under sections 54 and 54 GB of the Income Tax Act have been given some flexibility in meeting the riders attached to this benefit. This covers meeting obligations such as investment, deposit, payment and construction. If the due date for meeting these falls between April 1 and September 29, they could be met by September 30.
The last date of payment of settlement amount under the Vivad se Vishwas dispute resolution scheme without additional charges has been extended by two months till August 31. With additional charges, parties settling the dispute can make the payment by October 31.
Tax officials will also get extra time to meet some of their obligations, including for passing assessment orders. For this, the due date has been extended from 30 June to 30 September. The deadline for passing a penalty order, earlier extended to June 30, has been further extended to September 30.
Taxpayers have been given more time to meet various compliance requirements.
