CBDT issues conditions and forms to obtain income tax exemption on covid 19 aid money

The government, via a press release dated June 25, 2021, announced that money received by an individual for expenses incurred on the treatment of Covid-19 or gratis received (by family members) during death due to covid-19 of an employer or any parent/volunteer would be exempt from income tax. The income tax exemption was notified in the 2022 budget.

The income tax exemption is effective from the 2019-2020 financial year. As the tax benefit was granted retroactively, therefore, if the recipient of the “aid” money had not informed the government when filing a tax return, it was not an issue . Indeed, the exemption was granted under section 56 of the Income Tax Act 1961. In accordance with income tax laws, money received under this article is not considered income and therefore does not have to be reported to the income tax department.

Now, the Central Board of Direct Taxes (CBDT) issued a notification on August 5, 2022, asking family members (of people who died due to covid) who had received an ex gratia payment from the employer of the deceased or financial support from parents and other supporters, to submit a form and specified evidence.

In accordance with the notification, these family members are required to submit a form called “Form A” to the assessment officer. Furthermore, the CBDT has clarified the conditions under which the aforementioned income tax exemption may be requested by family members. The conditions are as follows:

a) the death of the individual must take place within six months from the date of the positive test or the date on which he was clinically determined as a case of COVID-19, for which a sum of money has been received by the family member;

In addition, the notification asked family members to also keep track of the following documents:

a) the individual’s positive COVID-19 report, or medical report if clinically determined to be COVID-19 positive as a result of investigations conducted at a hospital or inpatient facility by an attending physician;

(b) a medical report or death certificate issued by a physician or government vital statistics office, in which it is stated that the person’s death was related to the coronavirus disease (COVID-19).

Form A must be submitted within 9 months of the end of the fiscal year in which the money is received or December 31, 2022, whichever is later. Therefore, if you received the money during the 2020-21 fiscal year (which ended March 31, 2021), you must submit “Form-A” by the December 31, 2022 deadline.

Abhishek Soni, CEO, – an ITR filing company says: “If a family member fails to submit Form A as defined by the CBDT within the time period applicable to him, this tax exemption on income will not be available. to the family member of a deceased person due to Covid-19.

According to the press release, the income tax exemption is available without any limit for the amount received from the employer. The amount received from all other relatives and supporters will be exempt up to Rs 10 lakh only.

Soni says, “The income tax exemption for the maximum limit of Rs 10 lakh includes money received to cover the cost of treatment for covid-19 and for financial assistance to the family member of the deceased. ”

Form A to be submitted by an individual asks them to provide the following information:

  • Name, address, PAN
  • Beneficiary’s relationship to the deceased
  • Details of diagnosis of HIV positive for Covid-19, i.e. S.No./ Id No. of doctor
  • report/test report
  • Details of the death due to COVID-19 and medical report or death certificate issued by a doctor or a government vital statistics office, in which it is indicated that the death is related to the coronavirus disease (COVID-19), i.e. S.No. / Medical report identification number
  • Amount received from deceased’s employer and other person(s)
  • Name, address and PAN of the employer of the deceased:
  • Year in which the amount was received
  • Amount received from employer
  • Name, address and PAN of the other person/persons
  • Year in which the amount was received
  • Amount received from others
  • Total amount received (both from employer and others)

While submitting Form A, a person should attach the above mentioned documents i.e. the covid report stating that the date of diagnosis and date of death are within 6 months along with the medical report certifying that the death was due to covid-19.