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Centre notifies new condition for tax exemption given to Covid aid

NEW DELHI: The Central Board of Direct Taxes (CBDT) has launched a new condition for granting tax exemption to the Covid-related aid acquired by the household of an individual who died due to Covid.

Section 56 of the Income Tax Act exempts aid acquired by the member of the family of an individual who died due to Covid topic to sure circumstances. Income Tax Act says that this aid has to be acquired inside one 12 months of the individual’s loss of life and meet every other condition the federal government specifies.

The newest order from CBDT introduces a new condition. The loss of life of the person must be inside six months from the date of testing constructive or from the date of being clinically decided as a Covid-19 case for which any sum of cash has been acquired by the member of the household.

The fund might both be from the employer of the deceased individual or from every other individual topic to a most of 10 lakh. Such sum won’t be counted as taxable beneath the pinnacle ‘income from other sources,’ if it meets all of the circumstances.

The order additionally stated that the member of the family of the person ought to maintain a document of a listing of paperwork together with the Covid-19 constructive report of the person or medical report if clinically decided to be Covid-19 constructive via investigations in a hospital or at every other facility. Also, particulars of such funds acquired have to be reported in a specified type newest by finish of December 2022, the order stated.

“CBDT has issued notifications on 5 August, 2022 prescribing circumstances for claiming exemption in respect of a perquisite by the use of reimbursement by the employer in respect of any expenditure for remedy of any sickness relating to Covid-19. CBDT additionally has issued notification prescribing circumstances for exemption from tax beneath part 56(2)(x) in respect of quantity acquired from unrelated individual for remedy of sickness relating to Covid and likewise in respect of quantity acquired from employer or every other individual by the household of the deceased who died due to Covid -19 sickness,” stated Ved Jain, former president of Institute of Chartered Accountants of India (ICAI).

Jain defined that the tax exemptions had been introduced on June 25, 202, nevertheless it was said that obligatory legislative amendments for these selections could be proposed sooner or later of time. Thereafter, Finance Act, 2022 inserted the amendments within the Income Tax Act with a rider that these exemptions although accessible from AY 2020-21 (FY 2019-20), shall be allowed topic to fulfilment of circumstances to be prescribed. The newest notifications have been issued prescribing the circumstances topic to which these exemptions will probably be allowed to the taxpayers.



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