Reimbursement of Mediclaim premium

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C.A Alok Mukherjee (Querist)

27 October 2009 Suppose X is a director, the company by virtue of the terms of agreement pays directly the mediclaim premium to GIC. Is it taxable in the hands of employee and can he claim section 80D deduction or it is a business expenditure of the company?

Suppose, y is an employee who pays the mediclaim premium and submit the receipt for reimbursement to the company. Will it be taxable in his hand? Can he claim section 80D benefit?

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)

27 October 2009 It is a business expenditure and X can't claim undrer section 80 D,

It would be taxable in the hands of Y.He should not claim as the company is incurring the expenditure, although he got the Premium payment certificate in his name but it can be disallowed in case of scrutiny.

C.A Alok Mukherjee

C.A Alok Mukherjee (Querist)

27 October 2009 Sanjay, i agree with you about the first part.

But in my second query you replied that it will be taxable in his hand but there is a specific section section 17(2)(iv) which reads as " any sum paid by the employer in respect of any premium paid by the employee.....section 80D", exempts the income from his part.
I also agree that he will not get any benefit under section 80D.
I therefore really want to know how then the reimbursement part will be taxable as income?

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)

27 October 2009 Hi Alok,

You are correct. I have missed the provisio (iv). thanks for correcting me.

So it would not be taxable perquite( the reimbursement).

I also feel the employee will not be able to get 80 D benefit as he is not actualy paying the premium.

Yout last line is not clear to me. How the question of taxability of reimbursement arise after this ?

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