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reimbursement of medical expenses

vijay singla (learner) (340 Points)

29 March 2010

dear friends if an employee of central govrt or state govt take medical treatment in govt hospital or private hospital not maintained by the employer is medical reimbursemnt is taxable in the hands of employee which is reimbursed as per govt rules . as per section 17(2) it exempted upto rs 15000/-. or fully exempted ? but generally it is not considered by ddo for tds pls make it clear

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Sunil Liladhar Kotak (Manager (F & A)) (2025 Points)
Replied 30 March 2010

Dear,

Pls find the relevant extracts from the ACT

Limit of 15000/- will be applicable to these people unless it falls in to the Cluse (i) or (ii)

(i) the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer;

⁹²[(ii) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family

(a) in any hospital maintained by the Government or any local authority or any other hospital approved⁹³ by the Government for the purposes of medical treatment of its employees;

(b) in respect of the prescribed diseases⁹⁴ or ailments, in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines⁹⁵ :

Provided that, in a case falling in sub-clause (b), the employee shall attach⁹⁶ with his return of income a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital;]

(iii) any portion of the premium paid by an employer in relation to an employee, to effect or to keep in force an insurance on the health of such employee under any scheme approved by the Central Government ⁹⁷[or the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999),] for the purposes of clause (ib) of sub-section (1) of section 36;

(iv) any sum paid by the employer in respect of any premium paid by the employee to effect or to keep in force an insurance on his health or the health of any member of his family under any scheme approved by the Central Government ⁹⁸[or the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999),] for the purposes of section 80D;

(v) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family [other than the treatment referred to in clauses (i) and (ii)]; so, however, that such sum does not exceed ⁹⁹[fifteen] thousand rupees in the previous year;

(vi) any expenditure incurred by the employer on

(1) medical treatment of the employee, or any member of the family of such employee, outside India;

(2) travel ¹[and] stay abroad of the employee or any member of the family of such employee for medical treatment;

(3) travel and stay abroad of one attendant who accompanies the patient in connection with such treatment,

²[subject to the condition that

(A) the expenditure on medical treatment and stay abroad shall be excluded from perquisite only to the extent permitted by the Reserve Bank of India; and

(B) the expenditure on travel shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including therein the said expenditure, does not exceed two lakh rupees;]

(vii) any sum paid by the employer in respect of any expenditure actually incurred by the employee for any of the purposes specified in clause (vi) subject to the conditions specified in or under that clause :

³[Provided further that for the assessment year beginning on the 1st day of April, 2002, nothing contained in this clause shall apply to any employee whose income under the head Salaries (whether due from, or paid or allowed by, one or more employers) exclusive of the value of all perquisites not provided for by way of monetary payment, does not exceed one lakh rupees.]

Explanation.For the purposes of clause (2),

(i) hospital includes a dispensary or a clinic ⁴[or a nursing home];

(ii) family, in relation to an individual, shall have the same meaning as in clause (5) of section 10; and

(iii) gross total income shall have the same meaning as in clause (5) of section 80B;]

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Amir (Learner) (4016 Points)
Replied 30 March 2010

Dear Sir,

Sunil has rightly mentioned just want to add that

Exemption of Rs. 15,000 will be available in case of reimbursements of medical expenses in private treatments.

Where the treatment is done in Govt. Hospitals or as per rules then Entire amount will be exempt.

So it can be said that Rs. 15,000 is the minimum benefit available under these provisions and DDO should allow this benefit

vijay singla (learner) (340 Points)
Replied 30 March 2010

Originally posted by : Amir
	Dear Sir, Sunil has rightly mentioned just want to add that Exemption of Rs. 15,000 will be available in case of reimbursements of medical expenses in private treatments. Where the treatment is done in Govt. Hospitals or as per rules then Entire amount will be exempt. So it can be said that Rs. 15,000 is the minimum benefit available under these provisions and DDO should allow this benefit

thanx amir pls clear my one doubti.e if a govt employee take treatment from from govt hospital like pgi chd and incurred a sum of rs 300000 on treatment and employer reimburesement Rs200000. then how much is taxable Rs 185000 or nil

if in the above case he takes treatment from private hospital wat amount is taxable

Amir (Learner) (4016 Points)
Replied 30 March 2010

Dear Sir,

If the treatment is done in a Govt. Hospital or in the one which is approved by the Govt. for its employees - then Nil amount would be taxable out of the reimbursement of Rs. 2,00,000/-

If the above case is of treatment done in a Private Hospital(which is not approved also) - Then Total reimbursements of such kind during the year will be added and from that Rs. 15,000 will be made exempt.

So if employee has already claimed Rs. 15,000 as exempt during the year then entire Rs. 2,00,000 will be taxable otherwise the amount in excess of the unutilized limit of Rs. 15,000.

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