CBDT prescribed terms & Conditions for claiming exemption in respect of a perquisite by way of reimbursement of expenditure for treatment of Covid-19.

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CBDT prescribed terms & Conditions for claiming exemption in respect of a perquisite by way of reimbursement of expenditure for treatment of Covid-19.

CBDT has issued a Press Release on 25th June,2021 during Covid Time announcing the tax exemption to employees for financial supports received from the employer or friends and relatives. It was stated that necessary legislative amendments for these decisions shall be proposed in due course of time.

Finance Act, 2022 has inserted the amendments in the Income Tax Act with a rider that these exemptions though available from AY 2020-21 ( FY 2019-20) but shall be allowed subject to fulfillment of conditions to be prescribed.

CBDT has come out with a Notifications providing for terms & conditions for claiming exemption in respect of a perquisite by way of reimbursement by the employer in respect of any expenditure for treatment of any illness relating to Covid-19.

CBDT also has issued notification prescribing conditions for exemption from tax under section 56(2)(x) in respect of amount received from unrelated person for treatment of illness relating to Covid and also in respect of amount received from employer or any other person by the family of deceased who died due to Covid -19 illness.

For medical reimbursements received from person other than employer, it may be relevant to point out that statement in Form 1 (prescribed under the notification) is required to be filed before the AO within 9 months from the end of the financial year in which amount is received or by 31.12.2022, whichever is later.

Similarly, for payments received by legal heir pursuant to death, statement is required to be filed before the AO in Form A (prescribed under the notification) within 9 months from the end of the financial year in which amount is received or by 31.12.2022, whichever is later.

The copy of the notification is as under:

CBDT prescribed terms & Conditions for claiming exemption in respect of a perquisite by way of reimbursement of expenditure for treatment of Covid-19.

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