Medical Allowance

This query is : Resolved

Harshad Desai (Querist)
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17 November 2008 My Company is paying Rs.1,250/- every month to all employees in their pay slip. This amount has been treated as exempted while calculating tax liability. Without taking any proof/s for amount spent on medical expenses, my Company is taking declaration from employee that the amount received by the employee has been spent for the purpose for which it has been given. Will it be correct on the part of Income Tax Act/Law? What will be the end responsibility of Employee as well as Employer?

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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17 November 2008 If the Co. is paying a fixed sum every month that is fully taxable in the hands of employees. Medical Allowance is fully taxable.

However Re-imbursement of medical expenses is exempted up to Rs. 15000 p.a. But in this case employees needs to submit medical bills and Emplyers has to pay such sum accordingly.

Deepak Agrawal

Deepak Agrawal (Expert)
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17 November 2008 Ok

Ravikumar.G

Ravikumar.G (Expert)
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17 November 2008 Further,
Liable for FBT :
Expenditure actually incurred by the employee for medical treatment in an unapproved hospital upto Rs.15,000/- during the year.

Ravikumar.G

Ravikumar.G (Expert)
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17 November 2008
Not Liable for FBT :
Expenditure exceeding Rs.15,000/- during the year, actually incurred by the employee for medical treatment in an unapproved hospital.

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