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Income Tax on Medical allowance, Medical Reimbursement, Medical Treatment, Medical Facility

Income Tax Treatment for perquisites and allowance given to employees under different heads like Medical allowance, Medical Reimbursement, Medical Treatment Allowance or Medical Treatment in employer hospital etc. Income Tax provide different tax treatment Medical allowance, Medical Reimbursement and Medical Treatment hospital. As Medical Allowance is fully taxable and Medical Reimbursement is exempted upto Rs 15000/- subject to employee giving medical expenses bills and Memo. So individual claim deduction of Rs 15000/-

For the purpose of Income Tax Act, any payment made by employer to employee will be taxed under Income Tax head” Income From Salary” and with the increase in the cost of medical facilities employers are providing different medical facilities either directly or indirectly through different corporate tie ups.

Treatment in India
Medical allowanceFully taxable
Medical treatment in own hospital of employer (for employee and his family members)Tax free
Mediclaim insurance policy/ reimbursement of premium for employee & family membersTax free
Reimbursement of medical expenditure for employee or his family
  • Treatment in private clinic
Exempt up to 15000
  • Treatment in govt. hospital or govt. recognize hospital
Fully exempt
  • Treatment of specified diseases in specified hospital prescribed by CCIT tax free
Fully exempt

Some large corporate houses are maintaining hospitals for its employees and their families. One of the good example is of Cement and Mining companies which generally provide medical facilities to employees living in company accommodation or colonies which are near to factories but are quite far from cities from the income tax perspective it will be not be taxed.

Treatment outside India
Staying expenditure of patient or one attendantPrescribed by RBS is Exempt
Treatment expenditure of patientPrescribed by RBS is Exempt
Travelling expenditure of patient or one attendant
  • gross total income of employee is upto 200000
Exempt
  • excess of 200000
Fully taxable

Note:

  1. Family means:
    1. Spouse and children of employee.
    2. Parents, brother and sister wholly dependent on employee.
  2. The perquisite is taxable to both specified and non- specified if bills are issued in the name of employee and payment is made by employer
  3. Employee should with return of income a certificate from the hospital

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One thought on “Income Tax on Medical allowance, Medical Reimbursement, Medical Treatment, Medical Facility
  • MRINAL KANTI NATH says:

    Please clarify as to income receivable as employees group insurance savings part amount as released by the govt. at the discontinuation of the scheme. whether such amount is exempted from IT.