Difference between Medical Allow And Medical Reimbursement

 yes, there is a difference between allowance and perquisites . medical allowance is a kind of allowance and medical reimberesement is perquisites .

medical allowance is fully taxable but medical reimbursement is exempted to the extent of rs 15000

Medical Reimbursement and Medical Allowance are totally different things.

Medical Allowance: It is a fixed monthly allowance paid in your monthly salary and it is added in your taxable income (which means it is taxable).

Medical Reimbursement: As name suggests it is a reimbursement of medical expenses incurred by the employee. In case of Medical Reimbursement, employee is required to submit the cash memos, bills to employer to claim the reimbursement. After verification of bills employer reimburses employee, subject to pre-decided limits. Medical Reimbursement up to Rs. 15000 p.a. is exempt from Income Tax. 

Since you are already paying Fixed Monthly Medical Allowance to employees, I would like to suggest you a method by which, employees who are actually incurring medical expenses can save some Income Tax.

Assuming that you are paying Rs. 1000 pm as fixed Medical Allowance, you can change your policy and start paying Medical Reimbursement of Rs. 12000 p.a. Employees will have to submit bills, cash memos to claim the Medical Reimbursement. You will have to maintain the record of each individual employee as regards his limit and actual reimbursement claimed. At the end of the year in case employee has some unclaimed balance in his account, same can be paid as one time Medical Allowance and obviously it will be added in taxable income.

For example an employee claims Rs. 8920 as a Medical Reimbursement during the year. His unclaimed balance is Rs. 3080. He will be paid Rs. 3080 as one time Medical Allowance in the last month and since it is allowance it will get added in his taxable income.

Hope my suggestion works for you.

Please note that, it is employer’s responsibility to pay Medical Reimbursement only against authentic bills, cash memos to claim exemption from Income Tax. This reimbursement is open to audit and scrutiny by both Tax Auditors and IT Dept. 

Thanks & Regards
Bhav Sharma

agree with BHAV sharma

Difference between Medical Allow And Medical Reimbursement:-

MEDICAL ALOOWANCE IS ALWAYS PAID IN CASH OR CHEQUES, WHEREAS, MEDICAL REIMBURSEMENT IS ALWAYS PAID IN KIND OR REIMBURSEMENTS (i.e. HERE REIMBURSEMENT MEANS FIRST YOU PAY TO REGISTERED HOSPITAL, THEN, EMPLOYER WILL PAY TO YOU.

THANKS ARD REGARDS

DARPAN AGGARWAL

Hi dears,

I spend Rs.35000/- towards my wife's delivery  and hospitalisation expenses and i received reimbursement from my employer, can i claim the whole amount as deduction or Rs.15000/-

Practically employer gives medial allowance as reimbursement?

whether pharmacy bills are enough for claiming exemption