Personal Finance

Received money for covid-19 treatment from employer, relatives? Proofs needed to claim tax exemption


If you have received money from an employer or relatives for the treatment of covid-19, then as per notifications issued by the Central Board of Direct Taxes (CBDT) on August 5, 2022, you are required to submit certain documents to your employer and also submit a form to the income tax department for the money to be tax exempt.

On June 25, 2021, the government, via a press release, announced that money received by an individual for expenses incurred on the treatment of Covid-19 or as ex-gratia received (by family members) on death due to covid-19 from an employer or any relative/well-wisher would be exempt from income tax. The income tax exemption was notified in Budget 2022. The income tax exemption is effective from FY 2019-20 onwards.

As per the notifications issued on August 5, the CBDT has asked the employee who has received the money for treatment of covid-19 to submit the following document to his/her employer:

(i) the COVID-19 positive report of the employee or family member, or medical report if clinically determined to be COVID-19 positive through investigations, in a hospital or an in-patient facility by a treating physician of the person so admitted;

(ii) all necessary documents of medical diagnosis or treatment of the employee or his family member for COVID-19 or illness related to COVID-19 suffered within six months from the date of being determined as COVID-19 positive; and

(iii) a certification in respect of all expenditure incurred on the treatment of COVID-19 or illness related to COVID-19 of the employee or of any member of his family.

Further, the CBDT has asked the individual to keep a record of the following documents:

a) the COVID-19 positive report of the individual or his family member, or medical report if clinically determined to be COVID-19 positive through investigations in a hospital or an in-patient facility by a treating physician for a person so admitted;

b) all necessary documents of medical diagnosis or treatment of the individual or family member due to COVID-19 or illness related to COVID-19 suffered within six months from the date of being determined as a COVID-19 positive;

Along with submitting the above-mentioned documents to the employer, the CBDT has asked the employee to submit Form No. 1 to the Income tax department within nine months from the end of the financial year in which money is received for covid treatment or December 31, 2022, whichever is later.

As per Form No. 1, an employee is required to provide the following details:

  • Name, address, PAN
  • Details of the diagnosis of being positive for COVID-19 i.e., date and S.No./ Id No. of the medical report/ test report
  • Details of medical diagnosis or treatment of the individual or any member of his family for COVID-19 or illness related to COVID-19 suffered within six months from the date of being determined as COVID-19 positive i.e., date and Sr. No./ Id. No. of the medical report
  • Details of the total expenditure incurred on the treatment of COVID-19 or illness related to COVID-19 of the individual or any member of his family (In Rs)
  • Total amount received from any person
  • Name, address and PAN of the person from whom the amount has been received
  • Financial year in which the amount has been received

Along with Form no. 1, an employee is required to submit documents such as covid-19 positive report, necessary documents for medical diagnosis etc. to the income tax department.

Yashesh Ashar, Partner, Bhuta Shah & Co LLP – a chartered accountant firm says, “The notification came into effect retrospectively from April 1, 2020, i.e. for AY 2020-21 (FY 2019-20) onwards in line with the amendments in the Finance Act 2022. Since the press release for the exemption was issued on June 25, 2021, there is a possibility that the individuals in receipt of such a sum would have claimed exemption/TDS credit (if applicable) in the returns for the AY 2021-22 and AY 2022-23. However, the process for a refund for the individuals in receipt of such income and who had offered the same to tax in AY 20-21 is not clear.”



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