CBDT Procedure for Claiming Covid-19 related Tax Exemptions

CBDT finally prescribes/ notifies/ clarifies the procedure (i.e. Conditions, Documents and applicable Forms) for claiming tax exemption in respect of any sum received as ex-gratia, for treatment of ‘COVID-19’ or consequential death, by Individual/ family members, vide Notifications 90/2022, 91/2022 and 92/2022 dt. 05/08/2022.

These Notifications have been issued in line with the provisions of the Finance Act 2022 relating to tax exemption of any sum of money received by an Individual as reimbursement of actual expenses for COVID-19 treatment of self/ family members. Also, any sum of money received as ex-gratia from Employer by the family members of an Individual deceased due to COVID-19, w.r.e.f. FY 2019-20, has been exempted from tax, however there is restriction of Rs. 10 lacs where the amount is received from a source other than the employer. Accordingly, CBDT has notified the procedure for claiming tax exemption on reimbursements/ ex-gratia receipts by the Individual/ family members.

These CBDT Notifications have added certain burden or responsibility both on the employer/ employee (individual) for claiming such tax deduction/ exemption respectively, as they are required to collect/ submit the prescribed documents to claim deduction/ exemption in respect of such expense/ reimbursement and to make certain revisions/ additional filings in view of retrospective amendment.

CBDT Procedure for Claiming Covid-19 related Tax Exemptions: Notification 90/2022, 91/2022, 92/2022

CBDT Income Tax Notification 90/2022 dt. 05/08/2022: List of Document to be submitted by Employee/ Individual to Employer for claiming tax exemption on receipts for COVID-19 treatment/ illness

For claiming tax exemption on reimbursements for treatment of COVID-19, an employee/ individual is required to submit certain documents to the employer. For details, please refer the extracts of text of CBDT Notification 90/2022, as under:

S.O. 3703(E).- In exercise of the powers conferred by sub-clause (c) of clause (ii) of the first proviso to clause (2) of section 17 of the Income-tax Act,1961 (43 of 1961),the Central Government hereby notifies the following conditions, namely:-

1. The employee shall submit the following documents to the 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 a 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.

2. This notification shall be deemed to have come into force from 01/04/2020 and shall apply in relation to the assessment year 2020-2021 and subsequent assessment years.

CBDT Income Tax Notification 91/2022 dt. 05/08/2022: Requirement to Furnish Statement of Receipts (Form No. 1) for COVID-19 treatment by an employee/ Individual and maintenance of records, to claim tax exemption

For claiming tax exemption, an employee/ individual is required to furnish certain details to the Income Tax Deptt about amount received from employer/ any other person towards reimbursement of actual expenditure for COVID-19 treatment of self/ family members, in Form No., within 9 months from the end of the financial year or 31/12/2022, whichever is later. For details, please refer the extracts of text of CBDT Notification 91/2022, as under:

S.O. 3704(E).- In exercise of the powers conferred by clause (XII) of the first proviso of clause (x) of sub-section (2) of section 56 of the Income-tax Act,1961 (43 of 1961), the Central Government hereby specifies the following conditions, namely:-

1. The individual shall keep a record of the following documents, namely:-

(i) 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;

(ii) 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;

2. Statement of any amount received for any expenditure actually incurred by an individual for his medical treatment or treatment of any member of his family, for any illness related to COVID-19 for the purposes of clause (XII) of the first proviso to clause (X) of sub-section (2) of section 56 of the Income-tax Act, 1961 shall be verified and furnished in Form No. 1.

3. The details of the amount received in any financial year shall be furnished in Form No. 1 to the Income Tax Department within nine months from the end of such financial year or 31.12.2022, whichever is later. [Please refer attachment for format of Form No. 1]

4. This notification shall be deemed to have come into force from 01/04/2020 and shall apply in relation to the assessment year 2020-2021 and subsequent assessment years.

CBDT Income Tax Notification 92/2022 dt. 05/08/2022: Requirement to Furnish Statement of Ex-gratia Receipts (Form A) from employer/ others on account of death of Individual/ Employee due to COVID-19, by family members and maintenance of records, to claim tax exemption

For claiming tax exemption, in the case of death of an Individual/ employee due to COVID-19 (within 6 months from the date of testing positive), the recipient family member is required to furnish certain details to the Income Tax Deptt about amount received from employer/ any other person as ex-gratia, in Form A, within 9 months from the end of the financial year or 31/12/2022, whichever is later. For details, please refer the extracts of text of CBDT Notification 92/2022, as under:

S.O. 3705(E).- In exercise of the powers conferred by clause (XIII) of the first proviso to clause (x) of sub-section (2) of section 56 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies the following conditions, namely:-

1. (i) the death of the individual should be within six months from the date of testing positive or from the date of being clinically determined as a COVID-19 case, for which any sum of money has been received by the member of the family;

(ii) the family member of the individual shall keep a record of the following documents,-

(a) the COVID-19 positive report of the individual, or medical report if clinically determined to be COVID-19 positive through investigations in a hospital or an inpatient facility by a treating physician;

(b) a medical report or death certificate issued by a medical practitioner or a Government civil registration office, in which it is stated that death of the person is related to corona virus disease (COVID-19).

2. Statement of any sum of money received by a member of the family of a deceased person from the employer of the deceased person or from any other person or persons, on account of death due to COVID-19 for the purposes of clause (XIII) of the first proviso to clause (x) of subsection (2) of section 56 of the Income-tax Act, 1961 shall be verified and furnished in Form A.

3. The details of the amount received in any financial year shall be furnished in Form A to the Assessing Officer within nine months from the end of such financial year or 31/12/2022 whichever is later. [Please refer attachment for format of Form A]

4. This notification shall be deemed to have come into force from 01/04/2020 and shall apply in relation to the assessment year 2020-2021 and subsequent assessment years.

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