Dear BHR,
FBT is applicable if the Medical reimbursement limit is above INR 15,000/-, so if you give your CEO INR 18,000/- this additional INR 3,000 comes under FBT.
As for what you are doing it is absolutely ok. The rule as I have stated is simple. In each Financial Year an individual is entitled to exemption to the maximum of Rs. 15,000/- from his income on grounds of medical reimbursement. So, the term" reimbursement" means aginst production of bills of medical expenditures incurred in that Financial Year. There is no provision of carry forward. So, as long as their are bills the amount is exempted from Tax to the prescribed limit.

From India, Thane
Someone please help me understand this.
I want to know if I am paying 1250 per month towards medical as part of his gross salary
then what should I term it as Medical Allowance ? OR Medical Reimbursement ? and when should I collect Bill from Employee ? on monthly basis or on yearly basis ?

From India, Mumbai

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