Medical allowance or reimbursement exemption

You mixed medical allowance & medical reimbursement.

The difference between Medical Reimbursement and Medical Allowance is that in Medical Reimbursement, the employee first has to incur the expense from his own pocket and then provide the bills to his employer, who will then reimburse the actual amount spent.

However, in Medical Allowance, the employer gives a pre-specified amount to the employee irrespective of the expense incurred by the employee. The employee is not even required to furnish the bills to the employer.

It should be noted that although No Income Tax on Medical Reimbursement is levied up to Rs. 15,000, the amount received as Medical Allowance would be fully taxable as it is not covered under the tax-free allowances for employees.