Medical Reimbursement under FBT

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This query is : Resolved

RAMSANKAR MISHRA (Querist)

16 March 2009 In the first quarter i.e. from 1.4.8 to 30.06.8 the medical reimbursement for my boss was 7584.

In the second quarter i.e. 1.4.8 to 30.9.8 was 11376.

In the 3rd quarter was 22150.

Then while calculating for the advance FBT for each quarter what should be the FBT for the medical reimbursement for the company Ltd. and if in the 4th Quarter it is 5000 then what should be the exact FBT amount for the year.

As in the provision in Sec. 115WB (2)(E) the medical reimbursement up to Rs. 15000. What does it mean?

Similarly we are taking medical reimbursement for the employees of our organization than what is the procedure to calculate the FBT for the medical reimbursement for the employees.

Plz clarify me.

Regards

Ramsankar

CA J M Pattanayak

CA J M Pattanayak (Expert)

16 March 2009 Dear Ramsankar,

The section says - Company gives medical allowace which is exempted till 15000 if provided bills by employee. Beyond that its taxabale in the hand of employee.
So in easier way we can say that what ever amount is reiumbersed and not taxable in the hand of employee the same is considered for FBT.
Eg : Med All - 10000
Bill submitted - 5000.
FBT to be paid on Rs.5000.

In case of your Boss the whole amount is attracted for FBT as its medical reimbursement.
Hope I have clarified.

K V Subba Rao

K V Subba Rao (Expert)

16 March 2009 I have studied Sri R N Lakhotia's Article in
https://www.taxlawsonline.com/news/article/fringe.asp

I understand the following:

(1) Medical Expenditure upto Rs 15000-> This is not considered as salary; hence liable for FBT

(2) Medical Expenditure over and above Rs 15000-> This (Excess) is considered as salary; hence not liable for FBT

In case of your boss, total medical expenditure reimbursement works out to Rs 46110 (7584+11376+22150+5000). For this, tax treatment is as follows:

(1) Rs 15000 - Exempt from Income tax in the assessment of your boss but Company has to pay FBT

(2) Rs 31100 - Liable for Income tax in the assessment of your boss and Company need not pay FBT

Your boss may not be happy when you tell him about second part. So see his mood before raising topic before him and tell him the first part initially

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