Conditions that come with the government’s nod for cash payments for COVID-19 treatment pose a challenge

Although the ceiling of ₹2 lakh cash payment has been temporarily removed, those without PAN or Aadhaar are likely to face hurdles, say tax lawyers.

Relatives of a woman suffering from the coronavirus disease (COVID-19), carry an oxygen cylinder as she receives treatment in the emergency room of Holy Family Hospital in New Delhi.

The conditions set by the government in allowing cash payments over ₹2 lakh for COVID-19 patients’ treatment could make it difficult for people to crowd-fund bill payments. Patients without a PAN card or Aadhaar, as well as those who arrange to pay their treatment costs through cash loans of over ₹2 lakh from a single lender may also face challenges, said tax lawyers.

Section 269ST of the Income Tax Act, introduced after demonetisation, entails a 100% penalty for receipt of all cash payments over ₹2 lakh, but was proving to be a hurdle for several patients’ families as many don’t have access to cashless payment options.

Following a petition filed in the Delhi High Court on Friday that sought a relaxation of the relevant Income Tax law provision amidst the pandemic, the government late on Friday notified changes to permit such cash payments for COVID-19 patients’ treatment till May 31, provided the healthcare provider obtains the PAN or Aadhaar of the patient and the “payee”

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“How many people will be willing to help with cash for meeting medical bills if it requires them to share their PAN or Aadhaar, with the fear of tax department queries that could follow?” said a senior tax lawyer. Moreover, families looking to raise a cash loan from a single individual of over ₹2 lakh to meet medical expenses, may not be able to do so as a related section in the law prohibits such loans, he pointed out.

“Such large payments are usually required when a patient is becoming more critical and perhaps needs to move into an ICU from the regular ward and time is of the essence. Even digital payments through means such as NEFT sometimes take a couple of hours, but hospitals wait till these payments hit their accounts and the patients suffer,” said a lawyer who experienced this with a colleague last week.

The hospitals or nursing homes will also be required to note the relationship between the patient and the “payee”, the notification said. The Finance Ministry did not respond to queries on whether the word “payee”, which refers to the person being paid, was inadvertently inserted and would be corrected.

“It is also seen that during times like this, people borrow money from family and friends and as many people are using the prepaid payment instruments such as Google Pay, which are faster and time saving. However, many hospitals are not accepting payment on these platforms adding to the sufferings of the patients,” the petition in the High Court has pointed out.