Finance Bill 2022: Seperate Income Tax Deduction for COVID-19 treatment

Last Updated On: Feb. 7, 2022, 12:38 p.m.



Since last two years, COVID-19 pandemic has caused a great damage across the world, but still no particular income tax deduction has been provided by the Government which covers the treatment cost for COVID-19 who are not covered under any health insurance. 


ICAI has suggested to insert ‘COVID-19’ as an eligible disease for the purpose of claiming deduction under section 80DDB. It says, “In current times, it may be considered to allow medical expenditure incurred on treatment COVID-19 as expenditure incurred for treatment of specified disease for the purpose of claiming deduction under section 80DDB.


The Finance Bill, 2022 has provided for Separate income tax deduction for Covid-19 treatment.

Clause (x) of sub-section (2) of section 56 of the Income-tax Act, 1961 (the Act) inter alia, provides that where any person receives, in any previous year, from any person or persons any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum shall be the income of the person receiving such sum. However, certain exceptions have been provided in the clause for transaction specified therein.

Clause (2) of section 17 of the Act, inter alia, provides the definition of “perquisite”. However, certain exceptions have been provided which shall not include as perquisites.

What are the tax liability that a employer is borned for COVID-19 vaccination and treatment ?


Ongoing of COVID-19 pandemic, many companies have been providing the facility of COVID-19 vaccination to employees and eligible family members at office premises or otherwise providing reimbursement towards vaccination expenses incurred by employee directly for self / family members. Further, many companies have provided supplies of oxygen cylinders, oxygen concentrators, medicines, and other medical supplies to affected employees and their families.


During the press release dated on 25th June 2021, it is stated that relief has been provided in the terms of amount received by the taxpayer for medical treatment from employer, there is no clarity on benefits in kind provided. It may be contended that the cost of COVID-19 vaccination and/or 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 (as well as their family members) are healthy and safe so that the employee can provide continuous and uninterrupted services for the Company.



There are few deductions have been prescribed under the Income Tax Act, 1961 for medical treatment for self or dependent suffering from disability/severe disability, medical treatment of prescribed disease.

However, there is no specific deduction under the Act which covers treatment cost for COVID-19 patients who are not covered under any health insurance.

Donation made to PM CARES fund designed specifically for providing COVID-19 relief is eligible for 100% deduction u/s 80G of the I-T Act, but no corresponding deduction has been notified for expenses incurred on treatment of the disease itself.



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