An assessee incurred expense on operation of gall bladder (for removal of gall stones) and received reimbursement of part amount by the employer. Assessee is a Govt. employee.
1. Whether any deduction is available from total income for this medical expenditure?
2. What shall be the treatment of reimbursement by the employee. Is it taxable ?
3. The amount of expenditure was incurred on operation during Sept'16 and reimbursement was received during F. Y. 2017-18. In which F.Y./A.Y. the deduction be available or taxability (employer reimbursement) would arise?
Income Tax treatment in case of a salaried person who is provided with medical benefit:
This is dealt in section 17(2) of the Income Tax Act as perquisite.
The whole amount of expenses incurred by the employer will be allowable expenditure to such employer under Income Tax Act.
In case of a salaried person who is provided with medical allowance, the whole amount will be taxable.
The medical facility in India provided to the employee or his dependent relative (i,e children, spouse, brothers, sister and parents) by his employer will not be chargeable to tax to the extent of the following:
a) Medical facility provided in a Hospital owned/maintained by the employer.
b) Medical facility provided in a Hospital of Central Government/ State Government/ local authority.
c) Medical facility provided in a Private hospital if it is also recommended by the Government for the treatment of Government employees,
d) Medical facility provided for Specified medical facility (given in rule 3A) in a hospital approved by the Chief Commissioner of Income Tax.
e) Health insurance premium – Medical insurance premium paid on behalf of the employee or reimbursed to the employee by the employer is not chargeable to tax in the hands of the employee.
f) Any other facility in India – Any other expenditure incurred or reimbursed by the employer for providing medical facility in India is not chargeable to tax up to Rs. 15,000 in aggregate per assessment year (fixed medical allowance is fully chargeable to tax).
Income Tax treatment in case of medical insurance reimbursement under a mediclaim policy (for both salaried as well as non-salaried people):
Money received through a claim under a medical policy is only a reimbursement of expenditure already incurred by the policyholder. As this does not amount to profit or income for the insured person, this money is not taxable.
Apart from that any amount paid as medical insurance premium will be allowed as deduction u/s 80D to the maximum of Rs 60,000 (detail below) provided payment is made by cheque;
|
Type of deduction |
For |
Senior Citizen |
Others |
|
Basic deduction |
Self, Spouse or dependent children |
30,000 |
20,000 |
|
Additional deduction |
Parents |
30,000 |
20,000 |
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