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CBDT notifies situations for tax exemption on Covid-19 remedy assist

Finance Ministry has notified situations for tax exemption of sums obtained for Covid-19 remedy or on demise as a result of pandemic. Nevertheless consultants are usually not positive on the way to avail the advantages as due dates for submitting revised returns for final two evaluation years are already over.

The three notifications are follow-ups to amendments made within the Earnings Tax Act 1961 by means of Finance Act 2022. The amendments goal to fulfil bulletins made by the federal government final June. The notifications are deemed to be efficient from Apr 1, 2020 and apply to to the Evaluation Yr 2020-21 (AY21) and subsequent evaluation years.

Final June, the Finance Ministry had mentioned many taxpayers have obtained monetary assist from their employers and well-wishers for assembly their bills incurred for remedy of Covid-19. So as to be certain that no earnings tax legal responsibility arises on this account, it was determined “to supply income-tax exemption to the quantity obtained by a taxpayer for medical remedy from the employer or from any particular person for remedy of Covid-19 throughout FY 2019-20 and subsequent years.”

The Ministry additionally mentioned that sadly, sure taxpayers have misplaced their life as a result of Covid-19. Employers and well-wishers of such taxpayers had prolonged monetary help to their relations in order that they might deal with the difficulties that arose because of the sudden lack of the incomes member of their household. So as to present reduction to the relations of such taxpayers, it was determined to supply income-tax exemption to ex-gratia cost obtained by kinof the deceased from his/her employer or some other particular person. . “The exemption shall be allowed with none restrict for the quantity obtained from the employer and the exemption shall be restricted to ₹10 lakh in mixture for the quantity obtained from some other particular person,” the Ministry had mentioned.

Now, consultants are usually not positive how assesses will be capable of get the exemption. Chartered accountant and former president of Institute of Chartered Accounts in India, Ved Jain, says earnings tax returns for evaluation years 2020-21, 2021-21 and AY 2022-23 have already been filed and time to file revised returns for AY 2020-21 and AY 2021-22 has already expired.

“One wonders how a taxpayer would declare these exemptions if he/she has not claimed these exemptions in these evaluation years however fulfils the prescribed situations Additionally, it’s unclear if any taxpayer has claimed such exemption however now finds that he doesn’t fulfill the situations prescribed by these notifications, how the particular person goes to give up the declare.  “It will likely be very best that contemplating this anomaly, the CBDT points a round underneath part 119 allowing revision of tax returns already filed on this account,” he mentioned.

Documentation points

Sandeep Sehgal, Associate-Tax, AKM International mentioned that the time to file the revised and belated returns for AY 20-21 and AY 21-22 is already over. Although, the exemption was launched in Finance Act, 2022 the situations have been prescribed now, which additionally consists of sustaining sure paperwork and submitting sure varieties. “The taxpayers who’ve taken exemptions could not have acceptable documentation requested for. They will withdraw the declare by submitting an up to date return however it can contain cost of extra penalty, which is probably not justified in such instances. Some could not have claimed within the absence of availability of situations to be fulfilled, therefore a one-time alternative needs to be supplied in order that taxpayers can revisit their returns and revise, if want be,” he mentioned.

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August 06, 2022

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