Centre announces tax exemptions and extends compliance deadlines

The government extends the timelines for compliances related to income tax. In addition, it provides tax exemption on the financial help received to the taxpayer by his employer for COVID-19 treatment. Also, the Central Board of Direct Taxes (CBDT) provides tax relief to the family members of the taxpayers who have lost their life due to COVID-19.

Here are some of the important announcements by the CBDT vide circular dated 25th June 2021:

TDS deadlines

The CBDT further extends the deadline for furnishing quarter-four TDS return of the financial year 2020-21. The tax deductors can now file the TDS returns up to 15th July 2021 instead of the existing deadline of 30th June. Consequently, it extends the timeline for furnishing Form 16 for FY 2020-21 by the employer to his employees to 31st July 2021.

Aadhaar-PAN linking

There is a three-month further extension of the last date of the Aadhaar-PAN linking. Now, one can link Aadhaar with PAN by 30th September 2021. The government has made Aadhaar-PAN linking mandatory for income tax return filing.

Compliances to avail capital gains exemption

The income tax department has further provided relief for the compliance under section 54 to section 54GB of the Act. The above provisions offer long-term capital gains exemption to the taxpayers. To avail exemptions, the taxpayers have to make compliances as mentioned in the relevant provisions of the Act. The due dates of compliances falling between 1st April 2021 and 29th September 2021 can be complied with by 30th September 2021.

Payment under the Vivad se Vishwas scheme

The government extends the last date of payment of the amount (without additional amount) under the Vivad se Vishwas scheme to 31st August 2021. Previously, the due date was 30th June 2021. 

Further, the government notifies 31st October as the last date to pay the amount (with additional amount) under Vivad se Vishwas scheme.

Besides the extension of timelines for tax compliance, tax reliefs are also proposed.

No tax for expenditure on COVID-19 treatment

The taxpayer is exempt from paying tax on financial assistance received from the employer or any other person for COVID-19 treatment. The income tax department allows an exemption for the money received for meeting expenses for medical treatment of COVID-19. The exemption is allowed for the expenses incurred for the treatment of COVID-19 during FY 2019-20 and onwards.

Tax exemption for family members of the taxpayer

During the pandemic, many employers have provided financial support to the families of employees who died due to COVID-19. Therefore, the income tax department proposes to give tax relief on such payments by way of tax exemption to the family members who received ex-gratia payments during FY 2019-20 and onwards. 

If the taxpayer’s family member receives such payment from the taxpayer’s employer, the amount is fully exempt without any limit. 

However, the exemption is restricted to Rs 10 lakh if the family member receives ex-gratia payments from any other person. 

The government may propose necessary legislative amendments concerning the above tax exemptions in due course of time.

For any clarifications/feedback on the topic, please contact the writer at namita.shah@cleartax.in

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