Corona treatment requires a separate income tax deduction

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The Covid19 pandemic has wreaked havoc around the world – including India, for about two years but still, no specific deduction under the Income Tax Act 1961 has been provided by the government to cover the cost of the patient’s treatment.

COVID19 patients are not covered by health insurance. This is although currently, a small number of deductions are applicable under the Information Technology Act for medical care of yourself or a severely disabled/disabled dependent, medical treatment of prescribed illness and condition.

The same applies to several other costs an employer must pay for the treatment of its employees. 

Not surprisingly, ICAI recommends inserting “COVID19” as a qualifying illness for purposes of claiming a Section 80DDB deduction.

It said: “Currently, consideration may be given to allowing medical expenses incurred for the treatment of COVID19 as expenses incurred for the treatment of a specific illness to claim a deduction under section 80DDB.”

With this in mind, income tax experts have come up with several recommendations for tax relief for Covid patients and their families. Here’s a look at some of them: 

Taxation of expenses related to COVID19 vaccinations and treatment by employer reimbursement for vaccination costs directly borne by workers for himself/his family member.

In addition, many companies have provided oxygen cylinders, oxygen concentrators, medications, and other medical supplies to affected employees and their families. 

No clarity on tax treatment of vaccination costs (paid by employer) or employer-provided medical supplies for employees and family members. 

It can be argued that the cost of the COVID19 vaccination and/or provision of medical supplies to the employee/dependent family is not a measure of the individual benefits/facilities provided to the employee, but rather a determined by the business necessity to ensure that employees are healthy and safe so that employees can provide continuity of services and are free from disruption.

Separate deductions for COVID19 treatment 

Certain deductions are now provided under the Income Tax Act 1961 for medical care of yourself or a dependent with a serious disability/disability, Medical treatment of diseases and conditions as prescribed. However, there is no specific deduction under the law to cover the cost of treating COVID19 patients not covered by health insurance. 

A donation made to the PM CARES fund specifically designed to provide COVID19 relief is eligible for a 100% discount on the 80G computer law, but no corresponding deduction has been announced for expenses costs incurred during the treatment of the disease. 

“Due to the substantial costs associated with COVID19 treatment in public or private hospitals, a separate deduction is limited to Rs 1,00,000 or the actual cost of treatment payable by the taxpayer bear for himself or his family, whichever is less, may be considered to be referred to provide much-needed relief to the taxpayer, especially when these costs are not covered by the employer/health insurance,” suggests Sirwalla.

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