Covid-19 Medical reimbursement from Employer

For AY 22-23, my employer has included entire amount reimbursed towards treatment of Covid-19 under Salary in Form-16, without showing any breakup. Neither any exemption has been provided towards amount of Covid-19 medical reimbursement in Form-16. However, the same is exempt u/s 17(2) First Proviso (ii)(c) as per Finance Act 2022, which was notified very late.

How do I claim exemption of the same, as claiming exemption will result in difference in salary reported by the employer vs employee and may attract notice. How to proceed? 

Replies (3)
Quick Summary
If your employer has included your Covid-19 medical reimbursement in your Form-16 without providing an exemption, you can still claim this tax relief. While your employer may be reluctant to amend their TDS return, you can claim the exemption directly in your Income Tax Return (ITR). Be prepared to provide documentation, such as a certificate from your employer confirming the reimbursement was for Covid-19 treatment, to substantiate your claim during any potential inquiries.

Ask employer to modify the TDS return & declare the covid 19 reimbursement as tax exempt.

If he obliges, good; otherwise only option left is claim it in ITR. Let inquiry arise, you can reply and sunstantiate your claim as per law.

Thanks Sir. I also thought of the same as chances of employer modifying and furnishing modified Form-16 is bleak. The only thing I worry is the lengthy enquiry proceedings as I will have to present multiple documents 8n favor 9f my claim, as employer had no option in HRMS to mark the reimbursement as Covid or Non-Covid related.

Get the certificate from employer that particular amount was given for covid 19 medical treatment.

That's enough to claim the exemption.

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