Earnings tax consultants have made just a few suggestions for offering tax aid to Covid sufferers and their households. Right here we check out a few of them.
The Covid-19 pandemic is wreaking havoc internationally – together with India, for the final two years or so, however nonetheless no particular deduction below the Earnings Tax Act, 1961 has been offered by the federal government which covers the remedy value for COVID-19 sufferers who aren’t coated below any medical insurance. This regardless of the very fact being that at present, a handful of deductions can be found below the I-T Act for medical remedy for self or dependent affected by incapacity/ extreme incapacity, medical remedy of prescribed ailments and illnesses. The identical is the case with just a few different expenditures borne by the employer on the remedy of their employees.
No marvel, ICAI has recommended to insert ‘COVID-19’ as an eligible illness for the aim of claiming deduction below part 80DDB. It says, “In present occasions, it could be thought-about to permit medical expenditure incurred on remedy COVID-19 as expenditure incurred for remedy of specified illness for the aim of claiming deduction below part 80DDB.”
Maintaining this in view, earnings tax consultants have made just a few suggestions for offering tax aid to Covid sufferers and their households. Right here we check out a few of them:
Taxability of COVID-19 vaccination and remedy associated expenditure borne by employer
Throughout the ongoing pandemic, many firms have been facilitating the administration of COVID-19 vaccination to staff and eligible relations at workplace premises or in any other case offering reimbursement in the direction of vaccination bills incurred by worker instantly for self / relations. Additional, many firms have offered provides of oxygen cylinders, oxygen concentrators, medicines, and different medical provides to affected staff and their households.
There’s dearth of readability on the tax remedy of such value of vaccinations (as borne by the employer) or medical provides offered by the employer to staff and relations.
“Whereas the press launch dated 25 June 2021 offered aid by way of quantity obtained by a taxpayer for medical remedy from employer, there is no such thing as a readability on advantages in sort offered. It might be contended that the price of COVID-19 vaccination and/or provision of medical provides for the worker/ dependent household shouldn’t be a measure of non-public profit/ amenity offered to an worker, however a call guided by enterprise necessity to make sure that staff (in addition to their relations) are wholesome and protected in order that the worker can present steady and uninterrupted providers for the Firm. Due to this fact, such value ought to be abundantly clarified to be non-taxable within the arms of staff,” says Parizad Sirwalla, Accomplice and Head, International Mobility Companies-Tax, KPMG in India.
Separate deduction for COVID-19 remedy
Presently, just a few deductions have been prescribed below the Earnings-tax Act, 1961 for medical remedy for self or dependent affected by incapacity/extreme incapacity, medical remedy of prescribed ailments and illnesses. Nevertheless, there is no such thing as a particular deduction below the Act which covers remedy value for COVID-19 sufferers who aren’t coated below any medical insurance.
Donation made to PM CARES fund designed particularly for offering COVID-19 aid is eligible for 100% deduction u/s 80G of the I-T Act, however no corresponding deduction has been notified for bills incurred on remedy of the illness itself.
“Given the substantial value concerned in COVID-19 remedy in authorities or personal hospitals, a separate deduction capped upto Rs 1,00,000 or precise remedy value incurred by the taxpayer for self or household, whichever is decrease, could also be thought-about to be launched to offer much-needed aid to the taxpayers specifically when such prices aren’t coated below a medical insurance coverage/ reimbursed by the employer,” suggests Sirwalla.
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