Union Budget 2022: separate income tax deduction for necessary Covid treatment; here’s why

Tax experts have made some recommendations to provide tax relief to Covid patients and their families. Here we take a look at some of them.

The Covid-19 pandemic has been wreaking havoc around the world – including India, for about two years but still no specific deductions under the Income Tax Act 1961 have been provided by the government which covers the cost of treatment for COVID-19 patients who are not covered by any health insurance. This is despite the fact that currently a handful of deductions are available under the Information Technology Act for medical care for oneself or for dependents with a severe disability/disability, the medical treatment of prescribed diseases and conditions. The same applies to certain other expenses borne by the employer for the treatment of his personnel.

Not surprisingly, the ICAI suggested inserting “COVID-19” as an eligible disease for the purpose of claiming a deduction under Section 80DDB. It says: “At present, consideration may be given to allowing medical expenses incurred for the treatment of COVID-19 as expenses incurred for the treatment of a specified illness for the purpose of claiming a deduction under the 80DDB.”

With this in mind, income tax experts have made some recommendations to provide tax relief to Covid patients and their families. Here we take a look at some of them:

Taxation of expenses related to vaccination and COVID-19 treatment payable by the employer

During the ongoing pandemic, many companies have facilitated the administration of the COVID-19 vaccination to employees and eligible family members on office premises or have otherwise reimbursed vaccination expenses incurred by the employee directly for them. -even/the members of his family. In addition, many companies provided oxygen cylinders, oxygen concentrators, medicine and other medical supplies to affected employees and their families.

There is a lack of clarity on the tax treatment of the cost of vaccines (paid by the employer) or medical supplies provided by the employer to employees and their family members.

“While the June 25, 2021 press release provided relief in terms of the amount received by a taxpayer for medical treatment from the employer, there is no clarity on the in-kind benefits provided. assert that the cost of the COVID-19 vaccination and/or the provision of medical supplies for the employee/dependent family is not a measure of personal benefit/amenity provided to an employee, but a decision guided by business necessity to ensure that employees (and their family members) are healthy and safe so that the employee can provide continued and uninterrupted services to the Company. costs should be amply clarified to be non-taxable in the hands of employees,” says Parizad Sirwalla, Partner and Head, Global Mobility Services-Tax, KPMG in India.

Separate deduction for COVID-19 treatment

Currently, a few deductions have been prescribed under the Income Tax Act 1961 for the medical treatment of a person or dependent who is seriously incapacitated or disabled, the treatment medicine for prescribed diseases and conditions. However, there is no specific deduction under the law that covers treatment costs for COVID-19 patients who are not covered by any health insurance.

The donation made to the PM CARES fund designed specifically to provide COVID-19 relief is eligible for a 100% deduction under 80G of the IT Act, but no corresponding deduction has been notified for expenses incurred for the treatment of the disease itself.

“Given the substantial cost involved in treating COVID-19 in public or private hospitals, a separate deduction capped at Rs 1,00,000 or the actual cost of treatment incurred by the taxpayer for himself or his family, depending on lower amount, can be seen as introduced to provide much-needed relief to taxpayers, especially where these costs are not covered by a health insurance policy/reimbursed by the employer,” Sirwalla suggests.

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About Antoine L. Cassell

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