Dev_Bose Started The Discussion:

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

Hi, Amount payout for medical bills; Allowance paid to employee Rs. 15000 Whichever is at lower side is exempted from Income Tax Thanks, Vipin

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.

Thanks Vipin and Shrini.

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.

If as per the policy of the company for a particular Band / Grade the medical allowance is fixed as Rs.5000 then the company would provide tax benefit to the extent of Rs.5000 even if the employee has spent more than this.

Hope this is clear.

hi dev,

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!!

Hi Guys, Can an employee who paid Rs.15,000/- toward medical expenses in a year claim tax benefit when his salary break up shows 72,000/- as medical allowance. If so, how? Thank You ansari
How can a Central Govt pensioner claim deduction wrt to medical expenses incurred, if there is no insurance premiums, no CGHS, no reimbursements involved and diseases are not covered in the specified diseases list u/s11
I have spent on medical test for my spouse , can i claim tax excemption on the test conducted under section 80DD
How can you fix % as medical allowance? It shall be Rs.1250/- pm or less. If it is less, the employee can claim tax exemption to the extent of his allowance limit only. Pon


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