My company pays 4% of the basic salary as Medical Allowances.
Now, if an employee spends more than this amount on actual medical expenses,can that amount be deducted from his taxable income?He will be able to produce medical bills and I also understand the limit is Rs.15000
An amount of Rs.1250/- per month or Rs.15,000/- per annum is exempt for income tax which can be paid as medical allowance to the employee.
The employee needs to submit medical bills once in a quarter, half yearly or yearly and claim the reimbursement. Any amount paid / claimed beyond 15000 in a financial year would become taxable.
I still am not clear on one thing. I ll try to give you figures. Say for eg the company pays only 5000 as medical allowance whereas the emp spends about 15000 on medical bills from his own pocket. So will he get the rebate on Rs. 5000 only or can he get for Rs. 15000 by producing bills.
as per IT act, if u term it as medical 'allowance' (which is paid to the employee irrespective of the actual expense) it is taxable even if the employee produces the bills.
But, if u term it as medical 'reimbursement' (which is paid to the employee depending upon the actual expense), then upto Rs.15000/- per annum is exempt from tax, on producing the bills.
hope this helps!!
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