Government Extends Deadline of Income Tax Compliances; COVID Treatment Expenditure & COVID Death Ex-Gratia Exempted From Tax

Tax Exemption

The Government has granted an extension of timelines of compliances under the Income Tax Act and has also announced tax exemption for expenditure on COVID-19 treatment and ex-gratia received on death due to COVID-19.

It has been decided to provide an income-tax exemption to the amount received by a taxpayer for medical treatment from an employer or from any person for treatment of Covid-19 during FY 2019-20 and subsequent years. Further, it has also been decided to provide an income-tax exemption to ex-gratia payment received by family members of a person from the employer of such person or from other person on the death of the person on account of Covid-19 during FY 2019-20 and subsequent years. The exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to Rs. 10 lakh in aggregate for the amount received from any other persons.

Extension of Timelines

In view of the impact of the Covid-19 pandemic, taxpayers are facing inconvenience in meeting certain tax compliances and also in filing response to various notices. In order to ease the compliance burden of taxpayers during this difficult time, the Relief/Extensions has been provided through notifications no. 74/2021 & 75/2021, Circular no. 12/2021 dated 25th June, 2021. The relief/extensions are in relation to:

Objections to Dispute Resolution Panel (DRP) and Assessing Officer under Section 144C of the Income-tax Act, 1961, for which the last date of filing under that Section is 1st June, 2021 or thereafter, may be filed within the time provided in that Section or by 31st August, 2021, whichever is later.
The Statement of Deduction of Tax for the last quarter of the Financial Year 2020-21, required to be furnished on or before 31st May, 2021 under Rule 31A of the Income-tax Rules,1962, as extended to 30th June, 2021 vide Circular No.9 of 2021, may be furnished on or before 15th July, 2021.
The Certificate of Tax Deducted at Source in Form No.16, required to be furnished to the employee by 15th June, 2021 under Rule 31 of the Rules, as extended to 15th July, 2021 vide Circular No.9 of 2021, may be furnished on or before 31st July, 2021.
Last date of linkage of Aadhaar with PAN under Section 139AA of the Act, which was earlier extended to 30th June, 2021 is further extended to 30th Sep.
Last date of payment of an amount under Vivad se Vishwas (with additional amount) has been notified as 31st October, 2021.
Time Limit for passing assessment order which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.
Time Limit for passing penalty order which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.
Time Limit for processing Equalization Levy returns which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.