This amount is entitled to some tax exemptions.
Some of the key provisions in this regard, as per the Income Tax Act, are detailed below.
- The limit to such an exemption is Rs.15,000 per annum. (Note: There is no limit to the amount that your employer may give you as medical reimbursement. But any amount more than Rs.15,000 p.a. would be taxable even if actually incurred.)
- The expenses should be incurred on medical needs of your family which includes your spouse, children and dependent parents / siblings.
- There is no stipulation of any approved hospital or mode of treatment. In other words, expenses on naturopathy, ayurveda, etc. are also covered.
- The key word here is ‘reimbursement’ i.e. only the actual expenses, given against the supporting bills/documents, will be allowed as deduction. If you are receiving any ‘Medical Allowance’, no deduction will be allowed.
In addition to the foregoing, 'full amount' is tax free in the following instances:
- the value of any medical treatment provided to an employee / family members in any hospital maintained by the employer;
- sum paid by the employer in respect of any expenditure actually incurred by the employee on his/family's medical treatment in any Govt. / Govt-approved hospital
As regards medical treatment abroad
- the actual expenditure on stay and treatment abroad of the employee / family member, including one attendant, is excluded from perquisites to the extent permitted by RBI
- And if the employee's gross total income does not exceed Rs.2 lakhs, even the expenditure incurred on travel abroad by the patient / attendant is excluded from the perquisites.
