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  • Writer's pictureStambh Organization


Updated: Mar 14, 2022

Salem, 27 June 2021

A positive step was taken by the central government on 26 th June 2021 facilitating the tax

exemption of amounts received for COVID-19 treatment by employees who are taxpayers

from their employers or any well-wishers. After this announcement, tax practitioners have

been pouring in suggestions to ensure different categories of people are benefitted. Senior

citizens who do not have an employer to support and/or living off pensions will be the

primary beneficiaries if such exemptions are provided for COVID-19 treatment expenses

made out of their pockets. Employees with a limited income can greatly benefit from this

exemption if their employers or well-wishers directly pay the hospital bills. However, if the

amount is transferred to the employees’ accounts, it would create confusion during the

assessment. The former case would qualify as exemption but the latter might show higher

than the normal income of the taxpayers, causing them an excess burden. Moreover, the taxpayers

can only claim a deduction of up to Rs. 25,000 (Rs. 50,000 for senior citizens) under section

80D of the Income Tax Act for the payment of their own bills. This is a problem that needs to

be addressed before the notification of the tax break is issued since COVID-19 treatment is

very expensive, running into lakhs of rupees. The practitioners have requested the

government to provide all required details and include the tax break availability for medical

bills paid in cash as well.

Written by Sasmitha Kumaravadivel

Research Intern, Sasmitha Kumaravadivel

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