Salary
This query is : Resolved
Ahamed Kabeer
(Querist)
24 February 2014
medical allowance is part of the salary . this allowance is eligible for exemption or not. if eligible what amount should be eligible?
25 February 2014
Medical allowance is exempt up to Rs. 15,000/- per annum.
CA Sagar K Dhoot
(Expert)
25 February 2014
Hi,
It is not correct that Medical allowance is exempt. Medical allowance is taxable in the hands of employee.
Many people often use the words “medical reimbursement” and “medical allowance” interchangeably. They think both the words have same meaning. But they are different terms that offer different tax treatment under the Income-Tax Act, 1961.
‘Medical allowance’ is a fixed allowance paid every month to employees irrespective of the fact whether they submit the supporting bills or not. ‘Medical reimbursement’ is a payment made to employees against medical bills produced by them subject to their entitlement. Medical reimbursement up to Rs. 15,000 p.a. is exempt from Income Tax under Section 80D. Whereas Medical allowance is not specifically exempted so it is added to the salary as a perquisite and fully taxable.
It is not correct that Medical allowance is exempt. Medical allowance is taxable in the hands of employee.
Many people often use the words “medical reimbursement” and “medical allowance” interchangeably. They think both the words have same meaning. But they are different terms that offer different tax treatment under the Income-Tax Act, 1961.
‘Medical allowance’ is a fixed allowance paid every month to employees irrespective of the fact whether they submit the supporting bills or not. ‘Medical reimbursement’ is a payment made to employees against medical bills produced by them subject to their entitlement. Medical reimbursement up to Rs. 15,000 p.a. is exempt from Income Tax under Section 80D. Whereas Medical allowance is not specifically exempted so it is added to the salary as a perquisite and fully taxable.
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