Salary - perquisite - medical reimbursement

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Sir/Madam,
 
Sec 17 states that the following is exempt:
 
(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 approved by the Government for the purposes of medical treatment of its employees;
 
My query is what does medical treatment actually stand for? Does this include expenses incurred for purchase of medicine? This has not been defined in the act. My colleague has incurred heavy expenditure on purchase of medicine of close to Rs. 6 Lakhs and the cost of hospitalization was very less. The total amount was reimbursed by the employer. The employer is deducting tax on Rs. 6 lakhs as he opines that the expenditure on purchase of medicine is out of the scope medical treatment. The TDS is eating up the  entire salary and the take home is less than Rs. 1000. Request you to please advise on the above matter. Thanking you in advance.
Replies (1)

Wwell adhithya as you have already quoted the proviso to section 17, sum paid by the employer in respect of any expenditure incurred by the employee in any hospital as mentioned is not treated as perquisits.

Any amount paid for expenses incurred outside hospital is exempt upt a maximum of Rs. 15000.00 in terms of proviso (v) of section 17.

to sum up, purchase of medicine is also cost of treatment provided it is incurred while hospitalisation. any amount incurred towards purchase of medicine outside the hospital is  exempted only upto rs. 15000.  

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