Tax treatment of medical reimbursement
This query is : Resolved
16 June 2018
Hello all. Medical reimbursement received by a govt employee is taxable or not? Reimbursement Amount is Rs 300000. Hospital is approved by state govt. Is the same is covered under section 17 (2)?. Is the word maintained by govt. and approved by govt have the same meaning? kindly reply plz
I read section 17 (2) which are as follows
Expense incurred or reimbursed by the employer for the medical treatment of the employee or his family (spouse and children, dependent - parents, brothers and sisters) in any of the following hospital is not chargeable to tax in the hands of the employee:
a) Hospital maintained by the employer.
b) Hospital maintained by the Government or Local Authority or any other hospital approved by Central Government
c) Hospital approved by the Chief Commissioner having regard to the prescribed guidelines for treatment of the prescribed diseases.
2) Medical insurance premium paid or reimbursed by the employer is not chargeable to tax.
I read section 17 (2) which are as follows
Expense incurred or reimbursed by the employer for the medical treatment of the employee or his family (spouse and children, dependent - parents, brothers and sisters) in any of the following hospital is not chargeable to tax in the hands of the employee:
a) Hospital maintained by the employer.
b) Hospital maintained by the Government or Local Authority or any other hospital approved by Central Government
c) Hospital approved by the Chief Commissioner having regard to the prescribed guidelines for treatment of the prescribed diseases.
2) Medical insurance premium paid or reimbursed by the employer is not chargeable to tax.
17 June 2018
Actual medical Exps reimbursement or Approved not taxable in the hands of income tax assasee
19 June 2018
under which section it is exempt?
26 July 2025
Great question! Here’s a detailed explanation about the **tax treatment of medical reimbursement for a government employee** under **Section 17(2)** of the Income Tax Act:
---
## 📌 Tax Treatment of Medical Reimbursement (₹3,00,000)
### 1. **Is Medical Reimbursement Taxable?**
* **Medical reimbursement received by an employee is exempt from tax under Section 17(2)**, **if the expenses are incurred/reimbursed for treatment at specified hospitals.**
### 2. **What does Section 17(2) say?**
Exemption applies if the medical expenses are for treatment of the employee or his/her family (spouse, children, dependent parents, brothers, sisters) in any of the following:
| Hospital Type | Exemption Status |
| ------------------------------------------------------------------------------------------------- | ---------------- |
| a) Hospital **maintained by the employer** | Exempt |
| b) Hospital **maintained by Government or Local Authority** or **approved by Central Government** | Exempt |
| c) Hospital **approved by Chief Commissioner** as per prescribed guidelines | Exempt |
Also, **medical insurance premiums paid or reimbursed by employer are exempt**.
---
### 3. **Is "maintained by government" and "approved by government" the same?**
* **No. They are different:**
| Term | Meaning |
| ---------------------------- | --------------------------------------------------------------------------------------------------------------- |
| **Maintained by government** | Hospital is run, managed, and funded by government/local authority. |
| **Approved by government** | Hospital may be private but has received official government approval for treatment under specified guidelines. |
Your hospital being **approved by state government** means it falls under the exemption **if the approval is from the Central Government or Chief Commissioner** as per rules.
---
### 4. **Conclusion for your case:**
* If the hospital where treatment occurred is **approved by Central Government or Chief Commissioner** (not just state government approval), then the **medical reimbursement of Rs. 3,00,000 is exempt**.
* If hospital approval is only at **state level and not recognized by Central Govt or Chief Commissioner**, then **reimbursement is taxable**.
---
## 📝 Summary Table:
| Factor | Tax Treatment for Employee |
| ------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ |
| Medical reimbursement for treatment at govt/local authority hospital or hospital approved by Central Govt or Chief Commissioner | **Exempt** under Section 17(2) |
| Medical reimbursement for treatment at hospital approved only by State Govt (not Central Govt) | **Taxable** |
| Medical insurance premium paid/reimbursed by employer | **Exempt** |
---
If you want, I can help you check if your hospital is approved by Central Government or Chief Commissioner, or suggest alternate tax-saving methods.
---
**Would you like help with that?**
---
## 📌 Tax Treatment of Medical Reimbursement (₹3,00,000)
### 1. **Is Medical Reimbursement Taxable?**
* **Medical reimbursement received by an employee is exempt from tax under Section 17(2)**, **if the expenses are incurred/reimbursed for treatment at specified hospitals.**
### 2. **What does Section 17(2) say?**
Exemption applies if the medical expenses are for treatment of the employee or his/her family (spouse, children, dependent parents, brothers, sisters) in any of the following:
| Hospital Type | Exemption Status |
| ------------------------------------------------------------------------------------------------- | ---------------- |
| a) Hospital **maintained by the employer** | Exempt |
| b) Hospital **maintained by Government or Local Authority** or **approved by Central Government** | Exempt |
| c) Hospital **approved by Chief Commissioner** as per prescribed guidelines | Exempt |
Also, **medical insurance premiums paid or reimbursed by employer are exempt**.
---
### 3. **Is "maintained by government" and "approved by government" the same?**
* **No. They are different:**
| Term | Meaning |
| ---------------------------- | --------------------------------------------------------------------------------------------------------------- |
| **Maintained by government** | Hospital is run, managed, and funded by government/local authority. |
| **Approved by government** | Hospital may be private but has received official government approval for treatment under specified guidelines. |
Your hospital being **approved by state government** means it falls under the exemption **if the approval is from the Central Government or Chief Commissioner** as per rules.
---
### 4. **Conclusion for your case:**
* If the hospital where treatment occurred is **approved by Central Government or Chief Commissioner** (not just state government approval), then the **medical reimbursement of Rs. 3,00,000 is exempt**.
* If hospital approval is only at **state level and not recognized by Central Govt or Chief Commissioner**, then **reimbursement is taxable**.
---
## 📝 Summary Table:
| Factor | Tax Treatment for Employee |
| ------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ |
| Medical reimbursement for treatment at govt/local authority hospital or hospital approved by Central Govt or Chief Commissioner | **Exempt** under Section 17(2) |
| Medical reimbursement for treatment at hospital approved only by State Govt (not Central Govt) | **Taxable** |
| Medical insurance premium paid/reimbursed by employer | **Exempt** |
---
If you want, I can help you check if your hospital is approved by Central Government or Chief Commissioner, or suggest alternate tax-saving methods.
---
**Would you like help with that?**
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
OR add as source on Google news
- US CPA Course
- GST audit turnover threshold
- Balance sheet for ITR-3
- Rebate Under 87A Issue
- Gratuity not yet paid shown in form 16
- 54F disallowance taxed at what rate
- ITDS on Lease Rent
- Notice has been issued for wrong filling of place of supply in GSTR-1 return.
- Freelance Business code
- TDS/TCS Claimed and Refund received in previous year
- HUF Gifts
- Need Help for US CPA
- Self assessment tax amount
- ITC Liability on Capital Goods on death of Proprietor (GTA)
- Subject: Clarification on Applicability of E-Invoicing and 30-Day Reporting Requirement under GST
- GOODS SENT TO INTERSTATE BRANCH FOR EXHIBITION ON DELIVERY CHALLAN & GOODS RETURN BACK
- TRUST QUERY INCOME APPLIED
- Credit from Office of Regional Provident Fund Commissioner
- Interest for not showing invoice in GSTR-1
- Register of contract u/s 189
Trending Online Classes
-
Input Tax Credit, GST refunds and Recovery of refunds- Roadblocks and way outs
CA Nipun Arora03 September 2025 -
GST LIVE Certification Course - 43rd Weekdays Batch(With Govt Certificate)
Industry Expert15 September 2025
OR add as source on Google news
CAclubindia
