Your Taxes

Is the medical reimbursement received from the employer to the tune of ₹50,000 (for out-patient treatment) in a financial year taxable, even if the bills for the same are produced?

- Manish

As per the provisions of income tax law, the following facilities/reimbursements will not be included in the income of an employee:

-- Medical facility provided in a hospital, clinic, dispensary or nursing home maintained by the employer.

-- Reimbursement by the employer of medical expenditure incurred by an employee on his or his family members’ treatment.

-- Treatment in any government hospital (including dispensary/clinic or nursing home) or hospital (including dispensary/clinic or nursing home) maintained by the local authority or approved for government employees.

The value of medical treatment for prescribed diseases or ailments in any hospital is approved by the Chief Commissioner of Income Tax. Any expenditure incurred or reimbursed by the employer (including travel and stay) on medical treatment of an employee or his family members outside India is subject to certain conditions.

Other than the above cases, any money received by employee for his medical treatment or the treatment of any member of his family shall be exempt up to a limit of ₹15,000 per annum. Any reimbursement made beyond ₹15,000 per annum shall be taxable in the hands of the employee. To claim the exemption of ₹15,000 p.a., the employee is required to submit the bills to the employer.

It is assumed that the reimbursement of ₹50,000 by your employer is on account of treatment not specified in the above categories. Hence, any amount over and above ₹15,000 shall be taxable in your hands.

The writer is a practising chartered accountant. Send your queries to >taxtalk@thehindu.co.in