Centre to rectify error in treatment payment note

‘Payer’ appropriate term for those making the payment: EY

The Finance Ministry issued a corrigendum notification late Monday night to enable cash payments of more than ₹2 lakh for treatment of COVID-19 patients’ treatment, hours after assuring the Delhi High Court that an error in its May 7 notification to permit the same shall be rectified.

As per the notification that was issued last Friday after a petition was filed in the court, cash payments were allowed till May 31, provided the hospitals or health care providers obtained the Aadhaar or PAN details of the patients and the ‘payee’ and the relationship between the patient and the ‘payee’.

Since ‘payee’ refers to the person being paid and not the person paying the bill, the notification had not had the intended effect yet. The government’s counsel in the case informed the High Court that the word ‘payee’ shall be corrected.

The word “Payee” in the May 7 notification issued under the income tax law ‘is to be read as “Payer”, the Ministry said in its corrigendum notification.

“Based on the Centre’s assurance, the matter has been disposed of by the High Court,” said advocate Praveen Kumar, who was representing the petitioner in the case.

Consultancy firm EY said the term ‘payer’ was more appropriate to cover situations where payment in cash is made by patients’ relatives or friends. The firm noted that the relaxation may also need to be extended beyond May 31 ‘if the second wave prolongs beyond 31 May 2021’. The Centre may need to consider extending the relief beyond May 31, 2021.

The notification will provide relief to families of patients who are not familiar with banking channels or electronic payments, while tax authorities can use the data collected to verify the sources of income of those paying bills, the firm said.

“The additional compliance of obtaining PAN/Aadhaar and relationship details is intended to tackle any potential abuse of the relaxation and also to capture information for reporting to the tax authority. It may be noted that the recipient entity has annual reporting requirement of cash receipts exceeding INR two lakh towards goods or services under the Income Tax Act if the entity is liable to get its accounts audited under the law,” EY said.

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