Maximum Limit of Medical Reimbursement

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ankur (Querist)

02 September 2008 Medical Reimbursement of above Rs 15000/- for whole year i.e. 1250/-PM is liable to FBT or not.
And if a employer reimburse above Rs 15000/- in a year the part above 15000/- will included in the salary of employee?
pl answer the query is most urgent, kindly answer as soon as possible.

thanks

CA E.A.Ravikumar

CA E.A.Ravikumar (Expert)

02 September 2008 Answer to query 69 thro circular no.8 of 2005 on fbt says as follows;

Whether medical reimbursement up to 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?

69. 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.

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