Page 23 - Union Budget, 2022

Union Budget, 2022

Explication of Provisions relating to Individuals and Trusts

Rationalisation of provisions relating to Individuals
Incentives to National Pension System (NPS) subscribers for State Government employees
• Under Sec 80CCD(2), CG employees are eligible for deduction of the amount contributed by the CG to NPS
Account up to 14% of their salaries in the previous year whereas for other assessees the limit is only up to 10%
of their salaries.
• The said sub-section is proposed to be amended retrospectively to provide the enhanced benefit of 14% for State
Government employees.
AY 2020-21 and subsequent assessment years.

Even though State Governments were given an option to raise the contribution to 14% w.e.f. 01.04.2019 on their
own volition, deduction of contribution was not available in excess of 10% of salary to the employees. The proposed
amendment would ensure that the State Government employees would now get full deduction of the enhanced
contribution by the State Government.

Exemption of amount received owing to medical expenses and death relating to COVID-19
• It is proposed to provide that any sum received by an employee from his employer towards, either
COVID-19 related treatments for himself/his family or COVID-19 related death of the employee, will
not be taxable.
• Further, it is additionally proposed to provide that any sum received by an assessee from any other person
towards, either COVID-19 related treatments for himself/his family (without limit) or COVID-19 related
death of the assessee (up to a limit of Rs.10 Lakhs) will not be taxable.
• However, the amount received due to death from either the employer or any other person should be
received within 12 months from the date of death of the assessee.

Retrospectively from AY 2020-21 and subsequent years

The proposed amendment shall provide relief to taxpayers who have received ex-gratia towards COVID-19
treatment costs.

Easing conditions applicable on releasing of annuity to a disabled person
• Sec 80DD(2) provides that the deduction with respect to amount deposited under an insurance scheme for a
disabled dependent, shall be allowed to the assessee, only if the scheme provides for payment of annuity or lump
sum amount, in the event of the death of the individual or the member of the HUF in whose name subscription
to the scheme has been made, and not at an earlier date.
• The said sub-section is proposed to be amended to make the assessee eligible for deduction, even if the scheme
provides for payment of annuity or lump-sum to dependent before the death of the assessee but on the assessee
attaining the age of sixty years or more, and the payment or deposit to such scheme being discontinued.
• Further, the existing provision relating to deemed taxation of amount received by the assessee if the dependent
predeceases the assessee, shall not apply if such payment of annuity or lump-sum is made on attainment of sixty
years by the assessee.

AY 2023-24 and subsequent years.

The proposed amendment acknowledges the circumstances where the dependents may need the annuity or lump sum
payment during the lifetime of their guardians or parents and not only at the time of death.

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