ITR Filing: How to claim Tax Deduction for Covid-related Expenses?

The second wave of the Covid-19 pandemic has been more devastating than the first wave, adversely impacting millions of individuals and adding to the stress on healthcare services.

Consequently, the Central Board of Direct Taxes (CBDT) had recently made some provisions to help citizens claim tax deductions while filing the Income Tax Return (ITR) against coronavirus-related medical treatment expenses.

Tax Relief on given for Covid treatment, ex-gratia payment

The government on Friday provided tax relief to those who received help from their employers or others for Covid-19 treatment and also offered concessions for ex-gratia payment received by family members of those who died due to the deadly virus.

There is no upper limit on this. In case family members of an employee receive ex-gratia payment from an employer, it will be tax-free while in case of others pay up to Rs.10 lakh will be tax-free.

CBDT on Financial Support to Covid-hit families

The Board said that unfortunately, certain taxpayers have lost their lives due to COVID-19. Employers and well-wishers of such taxpayers extended financial assistance to their family members so that they could cope with the difficulties arising due to the sudden loss of the earning member of their family.

In order to provide relief to the family members of such a taxpayer, an income-tax exemption for ex-gratia payment received by family members from the employer on account of Covid-19 during FY 2019-20 and subsequent years will also be provided, the CBDT added.

"In order to provide relief to the family members of such taxpayer, it has been decided to provide an income-tax exemption to ex-gratia payment received by family members of a person from the employer of such person or from another 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 ₹10 lakh in aggregate for the amount received from any other persons," it added.

COVID-19 health insurance

A tax exemption of up to Rs.25,000 can be claimed under Section 80D against the premium paid for a health insurance policy. Health insurance policies bought to cover any Covid-19 related health expenses are also covered under this deduction.

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