Tax relief on COVID-19 treatment expenses; extension in timelines announced

The Government extends timelines of compliances under Income Tax Act. It also announced tax exemption for expenditure on COVID-19 treatment and ex-gratia received on death.

Government grants further extension in timelines of compliances

Taxpayers in India are unable to comply with tax regimes due to the resurgence of COVID-19. To make things easier for them, the government announced a number of tax breaks and exemptions. Here are some of the important announcements you need to know.

Tax exemption for employees

Many taxpayers have received financial help from their employers and well-wishers for meeting their expenses incurred for treatment of Covid-19. To ensure that no income tax liability arises on this account, it has been decided to provide income-tax exemption to the amount received by a taxpayer for medical treatment from employer or from any person for treatment of Covid-19 during FY 2019-20 and subsequent years.

Form 16

The Certificate of Tax Deducted at Source (TDS) in Form No.16 is required to be furnished to the employee by 15th June, 2021 under Rule 31 of the Rules, as extended to 15th July, 2021 vide Circular No.9 of 2021, may be furnished on or before 31st July, 2021.

Tax exemption to family members of the taxpayer

On account of death of the taxpayer due to Covid-19, family members will get tax exemption.

To assist family members of such taxpayers, the IT department has allowed income-tax exemption to ex-gratia payments received by family from the deceased’s employer or even from another person on account of death due to Covid-19 during FY 2019-20 and subsequent years.

The government, on the other hand, has set an exemption limit of Rs 10 lakh in aggregate for the amount received by the taxpayer’s family from any other person. While there is no cap on the amount of money received from the employer.

Aadhaar-PAN linking

To file income tax returns, Aadhaar must be linked to a PAN card. To facilitate compliance, the IT department has extended the deadline for Aadhaar-PAN linking by three months, to September 30th, 2021. This is the third extension, with the previous deadline being June 30th.

Payment under the Vivad se Vishwas scheme

The deadline for last date of payment of amount under Vivad se Vishwas has also been extended. Now the new deadline for paying without additional amount is 31st August 2021, which was earlier extended to 30th June, 2021.

Furthermore, the last date for the payments, with the additional amount, under Vivad se Vishwas scheme is 31st October 2021.

Availing capital gains tax exemption

To avail exemption under Section 54 to 54GB, the taxpayer must complete specific tasks within the deadline. For example, purchase or construction of the property, capital gains bonds investment, the deposit of money, or other action required to avail exemption under given sections.

The timelines falling between 1st April 2021 and 29th September 2021 stands extended to 30th September 2021.

For residential investments

In another relief, an extension of three months for a tax deduction for people investing in residential houses has been announced. For tax deduction for more than three months, the investment required to be made on or after April 1, can now be made up to 30th September.

Statement of tax

As per the IT rules, the Statement of Deduction of Tax for the last quarter of the Financial Year 2020-21, is required to be furnished on or before 31st May, 2021 under Rule 31A of the Income-tax Rules,1962. However, government giving some relief has decided to extend the date to 30th June, 2021, vide Circular No.9 of 2021, may be furnished on or before 15th July, 2021.

Some other important due dates related to FY 2020-21 extended were as follows:

  • Filing of the income tax return by taxpayers whose accounts are not required to be audited – 30th September 2021.
  • Filing of the income tax return by taxpayers liable for tax audit – 30th November 2021.
  • Filing of a belated and revised return – 31st January 2022.
  • Furnishing of the tax audit report -31st October 2021

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