Budget 2022: Exemption of amount received for medical treatment and on account of death due to COVID-19

Last updated: 01 February 2022

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The government has introduced tax exemptions for amounts received for COVID-19 medical treatment and for ex-gratia payments made to families of those who have passed away due to the illness. These exemptions apply to sums received from employers or other individuals, with specific limits for payments from non-employer sources. The amendments are effective retrospectively from April 1, 2020.

1. Clause (x) of sub-section (2) of section 56 of the Income-tax Act, 1961 (the Act) inter alia, provides that where any person receives, in any previous year, from any person or persons any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum shall be the income of the person receiving such sum. However, certain exceptions have been provided in the clause for transaction specified therein. 2. Clause (2)

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

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FAQ :

Amounts received for medical treatment of COVID-19 and ex-gratia payments to family members on account of death due to COVID-19 are now tax-exempt.

Individuals receiving payments for their own medical treatment or for the treatment of a family member due to COVID-19 can receive tax-exempt payments.

Payments received from an employer for medical treatment are not subject to any limit. Payments received from any other person for medical treatment are also not subject to a limit.

Family members can receive tax-exempt ex-gratia payments from the deceased's employer without any limit. Payments from other persons are tax-exempt up to an aggregate of Rs. 10 lakh.

These amendments take effect retrospectively from April 1, 2020, applying to assessment years 2020-21 and subsequent years.

Ex-gratia payments received by family members of a deceased person due to COVID-19 are tax-exempt if received within twelve months from the date of death.

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CCI News Desk

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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