What are the new Covid-related tax, compliance reliefs?

Explained | Tax, compliance reliefs announced for Covid-related assistance

The Finance Ministry said in a release that necessary legislative amendments for the above decisions would be proposed in due course of time

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The Union Finance Ministry on Friday announced a slew of measures and relaxations to provide relief to the families of Covid-19 patients and victims deeply impacted by the second wave of the pandemic.

Apart from the extension of key deadlines such as the linking of Aadhaar to PAN card — extended earlier this week — the government announced income tax exemptions on the ex-gratia amount given to Covid-19 victims and on Covid treatment costs paid for by friends or family.

Families that have lost a member due to the deadly virus and received ex-gratia payment from either the victim's employer or anyone else since FY20 and subsequent years are exempted from paying income tax on the amount received.

Read | Centre exempts tax on Covid-19 treatment spends

There is no limit on the amount exempted, the finance ministry said.

 

For Covid-19 treatment, amounts up to Rs 10 lakh paid for by friends or family will be exempted from income tax. This means that the person(s) who paid for the treatment are not liable to pay income tax as long as the amount is within Rs 10 lakh.

The Finance Ministry also said in a release that necessary legislative amendments for the above decisions would be proposed in due course of time.

Extension of key deadlines

On Friday, the Finance Ministry extended the deadline to link the Aadhaar card with PAN by three months to September 30. The government had in July 2017 made it compulsory to link Aadhaar with PAN through Section 139 AA of the Income Tax Act.

While it has extended the deadline multiple times, the consequences of not linking the two IDs within the deadline would see the PAN card become inoperative. Section 234H of the Income Tax Act also states that an individual missing the deadline can be fined up to Rs 1,000.

Also Read | Tax system must become less iniquitous

The deadline for Vivad Se Vishwas direct tax dispute resolution scheme was also extended by two months till August 31. Taxpayers can make payments with an additional amount of interest till October 31.

The deadline for employers to furnish Tax Deducted at Source (TDS) certificate in Form 16 to employees too was also extended from July 15 to July 31.

(With agency inputs)

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