FBT on medical expenses

This query is : Resolved

Gaurav Pathak (Querist)
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19 March 2009 suppose a worker is injured in factory premises during the work and employer admits them into hospital and pay all of his expenses. can the company is liable to pay FBT on this expense

Ram Avtar Singh

Ram Avtar Singh (Expert)
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19 March 2009 Whether medical reimbursement upto Rs. 15,000 (exempt in the hands of the employees) and medical reimbursement over Rs. 15,000 (taxed as perquisite in the hands of the employee) is liable to FBT?

At present, if any sum is paid by the employer for expenditure actually incurred by the employee for medical treatment in an unapproved hospital and it exceeds Rs 15,000 during the year, such sum is 'salary' as defined in clause (1) of section 17 of the Income-tax Act and liable to income-tax in the hands of the employee.

There is no change in this position. Since such sum is taxable in the hands of the employee, the same is not liable to FBT.

However, if any sum is paid by the employer for expenditure actually incurred by the employee for medical treatment in an unapproved hospital and it does not exceed Rs 15,000 during the year, such sum does not fall within the meaning of 'salary as defined in clause (1) of section 17 of the Income-tax Act and not liable to income-tax in the hands of the employee.

There is no change in this position. Since such sum is not taxable in the hands of the employee, the same is liable to FBT.