CBDT has issued Notification No. 91/2022 in S.O. 3704(E) dated 05.08.2022 and Notification No. 92/2022 in S.O. 3705(E) dated 05.08.2022 to notify the conditions which need to be satisfied for claiming exemption under the first proviso to section 56(2)(x) of the Income-tax Act, 1961 (‘Act’) in respect of amount received for the treatment of COVID-19 of the recipient individual or family member or receipt of exgratia amount by family member on the death of an individual due to COVID-19 and furnishing of Form 1 and Form A respectively for claiming such exemption.
These notifications, and consequently these notified conditions, shall apply retrospectively from AY 2020-21.
In order to claim exemption from any sum received by an individual, from any person, in respect of any expenditure actually incurred by him on his medical treatment or treatment of any member of his family, for any illness related to COVID-19 under clause (XII) of the first proviso of clause (x) of sub-section (2) of section 56 of the Act shall be exempt from tax provided conditions notified in Notification No. 91/2022 are satisfied.
The exemption under notification 91/2022 is available on furnishing of Form No. 1 with the income-tax department within 9 months from the end of the financial year in which such amount is received or 31.12.2022, whichever is later.
Similarly, exemption under clause (XIII) of the first proviso of clause (x) of sub-section (2) of section 56 of the Act shall be available if conditions specified in Notification No. 92/2022 are satisfied from any sum received by a member of the family of a deceased person, where the death occurs due to illness related to COVID-19,
(i) from the employer of the deceased person, or
(ii) from any other person or persons to the extent that such sum or aggregate of such sums does not exceed Rs. 10 lakh
and such sum has been received within 12 months from the date of death.
The exemption under notification 92/2022 is available on furnishing of Form A with the assessing officer within 9 months from the end of the financial year in which such amount is received or 31.12.2022, whichever is later.
Since these notifications have been made effective retrospectively from 01.04.2020, hence, Form No. 1 and Form A for any amount received and claimed as exempt under clause (XII) and clause (XIII) of the first proviso to section 56(2)(x) for the FY 2019-20, FY 2020-21 and FY 2021-22 shall be required to be furnished by 31.12.2022.
The term ‘family’ is defined but the definition as given in section 10(5) of the Act is imported here. As such, it is defined as "family", in relation to an individual, shall have the same meaning as in clause (5) of section 10.
Finance Act, 2022 has provided for income-tax exemption of amount received for medical treatment of COVID-19 by an individual and on account of death due to COVID-19 by a family member of such individual from any other person during the financial year 2019-20 and subsequent years. These amendments are retrospectively effective from 1st April 2020 or Assessment Year 2020-21.
It should be noted that the provisions of section 56(2)(x) do not apply in respect of any sum of money received from a relative. Hence, these provisions related to receipt of money in COVID-19 cases and chargeability to tax and exemption thereof shall apply only in cases of receipt of money from a non-relative person.
The exemption is provided for the receipt of the following amounts by the respective persons related to COVID-19-
Receipt from Employer:
Receipt of an amount (limited to actually incurred) by Employee from his employer for treatment of COVID-19 for self and family member.
Receipt of exgratia amount by a family member of the deceased employee who died due to COVID-19 from the employer of deceased employee
Receipt from any other person:
Receipt of an amount by an Individual from any person for medical treatment of COVID-19 for self and family member
Receipt of exgratia amount by a family member of the deceased individual who died due to COVID-19 from any person
The tax exemption is allowed to the following recipients-
Note: 1. It is proposed to provide 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.
2. No condition as to treatment in a government hospital or private hospital etc. is prescribed in the Act. Hence, the treatment may be undertaken in any hospital including home care and COVID Care Centre.
3. The exemption covers receipt of reimbursement of actual expenditure for medical treatment in respect of any illness relating to COVID-19 which shall, in author’s view, include expenditure incurred during quarantine/isolation due to COVID positive.
4. The ceiling of Rs. 10 Lakh exgratia amount shall apply only in case of receipt of the same from non-relatives as any amount received from any relative is anyway excluded from the applicability of section 56(2)(x) vide clause (i) to first proviso to section 56(2)(x).
5. The ceiling of Rs. 10 Lakh (applicable for non-employee cases) is in aggregate and may be received from one or more than one person.
6. The wording of the proposed amendment in section 56(2)(x) prescribes that tax exemption on receipt of exgratia by the family member of the deceased individual shall be exempt only if the amount does not exceed Rs. 10 Lakh. In case it exceeds Rs. 10 Lakh, the entire amount shall be taxable.
For this purpose, amendments have been made in Section 17 and Section 56 of the Act. This article discusses the amendments related to section 56 only.
The conditions notified by the CBDT in respect of exgratia amount received on account of COVID-19 from the employer by the employee is discussed in this article.
The Finance Ministry released a press statement dated 25.06.2021 where it was announced that income tax shall not be charged on the amount received by a taxpayer for medical treatment from the employer or from any person for treatment of COVID-19 during FY 2019-20 and subsequent years.
Clause (XII) of the first proviso to section 56(2)(x) provides for exemption to any sum of money received by an individual, from any person, in respect of any expenditure actually incurred by him on his medical treatment or treatment of any member of his family, for any illness related to COVID-19 subject to such conditions, as the Central Government may, by notification in the Official Gazette, specify in this behalf.
Note: Under this clause, only the amount received to the extent of the amount actually spent or incurred in the treatment of COVID-19 of self or family members is exempt. Receipt of any excess amount shall be taxable. If the amount is received from a relative then the entire amount of receipt is exempt from tax irrespective of the actual amount incurred.
Similarly, clause (XIII) of the first proviso to section 56(2)(x) provides for exemption to any sum of money received by a member of the family of a deceased person—
(A) from the employer of the deceased person; or
(B) from any other person or persons to the extent that such sum or aggregate of such sums does not exceed ten lakh rupees,
where the cause of death of such person is illness related to COVID-19 and the payment is—
(i) received within twelve months from the date of death of such person; and
(ii) subject to such other conditions, as the Central Government may, by notification in the Official Gazette, specify in this behalf.
These notifications have been issued by the CBDT in exercise of the powers conferred to it under the said provisos.
Thus clause (XII) deals with the receipt of reimbursement of cost by the individual himself for treatment of COVID-19 of self or his family members
Clause (XIII) deals with the receipt of exgratia amount by family member of the deceased individual who died due to illness related to COVID-19.
The conditions notified by the Board for claiming exemption under clause (XII) of the first proviso to section 56(2)(x) by an Individual in respect of receipt of amount from any non-relative for treatment of COVID-19 for self or family member as per Notification No. 91/2022 dated 05.08.2022 are as follows:-
1. The Individual shall keep the COVID-19 positive report of self or his family member.
2. The Individual shall also keep all necessary documents of medical diagnosis or treatment of the individual or family member due to COVID-19 or illness related to COVID-19.
Note: A new condition is added in the notification that the illness due to COVID-19 must have been suffered within a period of six months from the date of being determined as COVID-19 positive.
3. Reimbursement of the actual amount of treatment of COVID-19 for himself and family members received from any non-relative shall be verified and furnished in Form No. 1.
4. The details of the amount received in any financial year shall be furnished in Form No. 1 to the Income Tax Department within nine months from the end of such financial year or 31.12.2022, whichever is later.
5. This notification shall be deemed to have come into force from the 1st day of April, 2020 and shall apply in relation to the assessment year 2020-2021 and subsequent assessment years.
Form No. 1, interalia, requires furnishing of the following information-
(i) Name, address and PAN of the individual who has received the amount
(ii) Date of being diagnosed as COVID-19 positive with test report ID No.
(iii) Date and Medical Report ID No. of other illnesses caused by COVID-19 within six months
(iv) Total expenditure incurred on the treatment of COVID-19 or illness related to COVID-19
(v) Total amount received from any person
(vi) Name, address and PAN of the person from whom the amount has been received
(vii) Previous year in which the amount has been received
Though it is not made clear whether Form No. 1 is required to be filed online or offline, it is obvious that Form No. 1 needs to be filed electronically online. However, the notification is silent on the matter. The notification does not specify the manner and the procedure of furnishing Form No. 1 in online mode.
The conditions notified by the Board for claiming exemption under clause (XIII) of the first proviso to section 56(2)(x) by a family member of an Individual in respect of receipt of exgratia amount from employer of the deceased employee or any non-relative on the death due to illness related to COVID-19 as per Notification No. 92/2022 dated 05.08.2022 are as follows:-
1. The death of the individual should be within six months from the date of testing positive.
Note: A new condition is added in the notification that the death of the individual shall be within a period of six months from the date of being determined as COVID-19 positive.
2. The family member of the Individual shall keep the COVID-19 positive report and other medical reports of the individual.
3. The death certificate of the individual must mention that the cause of death is related to COVID-19.
4. The receipt of exgratia amount received from the employer of the deceased person or from any other person being non-relative due to death on account of COVID-19 shall be verified and furnished in Form A.
5. The details of the amount received in any financial year shall be furnished in Form A to the Assessing Officer within nine months from the end of such financial year or 31.12.2022, whichever is later.
6. This notification shall be deemed to have come into force from the 1st day of April, 2020 and shall apply in relation to the assessment year 2020-2021 and subsequent assessment years.
Form A, interalia, requires furnishing of the following information-
(i) Name, address and PAN of the recipient of the exgratia amount
(ii)Relationship of the recipient with the deceased person
(iii) Date of being diagnosed as COVID-19 positve with test report ID No.
(iv) Date of the death certificate with ID No.
(v) Amount received from employer and any other person
(vi) Name, address and PAN of the employer of the deceased and any other person from whom the amount has been received
(vii) Previous year in which the amount has been received
Though it is not made clear whether Form A is required to be filed online or offline, it is obvious that Form A needs to be filed electronically online. However, the notification is silent on the matter. The notification does not specify the manner and the procedure of furnishing Form A in online mode.
Notes:
1. This notification and as such these conditions have been made effective retrospectively from AY 2020-21.
2. It is pertinent to note that the return for AY 2020-21, AY 2021-22 and AY 2022-23 has already filed by the respective individuals or employees. The Finance Act, 2022 was notified on 31.03.2022 but the conditions have been notified by the Board five days after the expiry of the due date for filing of return of 31st July 2022 for salaried individuals on 05.08.2022.
Read the full text of CBDT Notification No. 91/2022 dated 05.08.2022 On Furnishing Form No. 1 for Claiming Exemption u/s 56(2)(x) by Individual for COVID-19 Treatment
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 5th August, 2022
S.O. 3704(E).—In exercise of the powers conferred by clause (XII) of the first proviso of clause (x) of sub-section (2) of section 56 of theIncome-tax Act,1961 (43 of 1961),the Central Government hereby specifies the following conditions, namely:-
1. The individual shall keep a record of the following documents, namely:-
(i) the COVID-19 positive report of the individual or his family member, or medical report if clinically determined to be COVID-19 positive through investigations in a hospital or an in-patient facility by a treating physician for a person so admitted;
(ii) all necessary documents of medical diagnosis or treatment of the individual or family member due to COVID-19 or illness related to COVID-19 suffered within six months from the date of being determined as a COVID-19 positive;
2. Statement of any amount received for any expenditure actually incurred by an individual for his medical treatment or treatment of any member of his family, for any illness related to COVID-19 for the purposes of clause (XII) of the first proviso to clause (X) of sub-section (2) of section 56 of the Income-tax Act, 1961 shall be verified and furnished in Form No. 1.
3. The details of the amount received in any financial year shall be furnished in Form No. 1 to the Income Tax Department within nine months from the end of such financial year or 31.12.2022, whichever is later.
Form No. 1
Declaration
I,_______________________________________________ (Name in full and in block letters) son/daughter/wife of __________________________________________ do hereby declare that:
To the best of my knowledge and belief whatever is stated in the above columns including the documents attached supporting the statement is correct and complete.
I further declare that during the previous year…….mm/dd/yyyy the total amount received by me is solely for the purpose of expenditure actually incurred by me for my medical treatment/ treatment of member of my family, for any illness related to COVID-19.
Place:
Date:
Yours faithfully,
Signature……….……………….
Name…………………………………
Designation…………………………
4. This notification shall be deemed to have come into force from the 1st day of April, 2020 and shall apply in relation to the assessment year 2020-2021 and subsequent assessment years.
[Notification No. 91/2022/F. No. 370142/31/2022-TPL (Part-2)]
UMME FARDINA ADIL, Under Secy., Tax Policy and Legislation Division
Note : It is certified that no person is being adversely affected by granting retrospective effect to this notification.
Download CBDT Notification No. 91/2022 dated 05.08.2022 On Furnishing Form No. 1 for Claiming Exemption u/s 56(2)(x) by Individual for COVID-19 Treatment in PDF format
Read the full text of CBDT Notification No. 92/2022 dated 05.08.2022 On Furnishing Form A for Claiming Exemption u/s 56(2)(x) by Family Member on Death of Individual for COVID-19 Treatment in PDF format
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 5th August, 2022
S.O. 3705(E).— In exercise of the powers conferred by clause (XIII) of the first proviso to clause (x) of sub-section (2) of section 56 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies the following conditions, namely:-
1. (i) the death of the individual should be within six months from the date of testing positive or from the date of being clinically determined as a COVID-19 case, for which any sum of money has been received by the member of the family;
(ii) the family member of the individual shall keep a record of the following documents, -
(a) the COVID-19 positive report of the individual, or medical report if clinically determined to be COVID-19 positive through investigations in a hospital or an in-patient facility by a treating physician;
(b) a medical report or death certificate issued by a medical practitioner or a Government civil registration office, in which it is stated that death of the person is related to corona virus disease (COVID-19).
2. Statement of any sum of money received by a member of the family of a deceased person from the employer of the deceased person or from any other person or persons, on account of death due to COVID-19 for the purposes of clause (XIII) of the first proviso to clause (x) of subsection (2) of section 56 of the Income-tax Act, 1961 shall be verified and furnished in Form A.
3. The details of the amount received in any financial year shall be furnished in Form A to the Assessing Officer within nine months from the end of such financial year or 31.12.2022 whichever is later.
Form A:
Declaration
I,_______________________________________________ (Name in full and in block letters) son/daughter/wife of __________________________________________ do hereby declare that:
To the best of my knowledge and belief whatever is stated in the above columns including the documents attached supporting the statement is correct and complete.
I further declare that during the previous year…….mm/dd/yyyy the total amount received by me is solely on account of death of my family member due to COVID-19.
Place:
Date:
Yours faithfully,
Signature …………….……………….
Name…………………………………
Designation…………………………
4. This notification shall be deemed to have come into force from the 1st day of April, 2020 and shall apply in relation to the assessment year 2020-2021 and subsequent assessment years.
[Notification No. 92/ 2022/ F. No. 370142/31/2022-TPL (Part-2)]
UMME FARDINA ADIL, Under Secy., Tax Policy and Legislation Division
Note : It is certified that no person is being adversely affected by granting retrospective effect to this notification
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