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Union Budget 2022: Separate income tax deduction for Covid treatment wanted; Here’s why

Income tax consultants have made a couple of suggestions for offering tax aid to Covid sufferers and their households. Here we check out a few of them.

The Covid-19 pandemic is wreaking havoc the world over – together with India, for the final two years or so, however nonetheless no particular deduction beneath the Income Tax Act, 1961 has been supplied by the federal government which covers the treatment price for COVID-19 sufferers who are usually not lined beneath any medical health insurance. This regardless of the very fact being that presently, a handful of deductions can be found beneath the I-T Act for medical treatment for self or dependent affected by incapacity/ extreme incapacity, medical treatment of prescribed ailments and illnesses. The similar is the case with a couple of different expenditures borne by the employer on the treatment of their workers.

No surprise, ICAI has steered to insert ‘COVID-19’ as an eligible illness for the aim of claiming deduction beneath part 80DDB. It says, “In current times, it may be considered to allow medical expenditure incurred on treatment COVID-19 as expenditure incurred for treatment of specified disease for the purpose of claiming deduction under section 80DDB.”

Keeping this in view, income tax consultants have made a couple of suggestions for offering tax aid to Covid sufferers and their households. Here we check out a few of them:

Taxability of COVID-19 vaccination and treatment associated expenditure borne by employer

During the continued pandemic, many corporations have been facilitating the administration of COVID-19 vaccination to workers and eligible relations at office premises or in any other case offering reimbursement in the direction of vaccination bills incurred by worker straight for self / relations. Further, many corporations have supplied provides of oxygen cylinders, oxygen concentrators, medicines, and different medical provides to affected workers and their households.

There is dearth of readability on the tax treatment of such price of vaccinations (as borne by the employer) or medical provides supplied by the employer to workers and relations.

“While the press release dated 25 June 2021 provided relief in terms of amount received by a taxpayer for medical treatment from employer, there is no clarity on benefits in kind provided. It may be contended that the cost of COVID-19 vaccination and/or provision of medical supplies for the employee/ dependent family is not a measure of personal benefit/ amenity provided to an employee, but a decision guided by business necessity to ensure that employees (as well as their family members) are healthy and safe so that the employee can provide continuous and uninterrupted services for the Company. Therefore, such cost should be abundantly clarified to be non-taxable in the hands of employees,” says Parizad Sirwalla, Partner and Head, Global Mobility Services-Tax, KPMG in India.

Separate deduction for COVID-19 treatment

Currently, a couple of deductions have been prescribed beneath the Income-tax Act, 1961 for medical treatment for self or dependent affected by incapacity/extreme incapacity, medical treatment of prescribed ailments and illnesses. However, there isn’t any particular deduction beneath the Act which covers treatment price for COVID-19 sufferers who are usually not lined beneath any medical health 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 treatment of the illness itself.

“Given the substantial cost involved in COVID-19 treatment in government or private hospitals, a separate deduction capped upto Rs 1,00,000 or actual treatment cost incurred by the taxpayer for self or family, whichever is lower, may be considered to be introduced to provide much-needed relief to the taxpayers specially when such costs are not covered under a health insurance policy/ reimbursed by the employer,” suggests Sirwalla.

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