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I a working in a PSU and i had already declared my parents as my dependents when i joined this company. Recently my father was hospitalised for multiple organ failure> I had to lend huge amount of money from my family members and friends for his treatment. i submitted all the receipts and medical bills incurred during his medical treatment in my office. My company paid 3.5 lacs as medical advance after submitting all the bills. As per the company's policy each employee is entitled to apply for medical re-imbursement for amount upto 10 lacs in a financial year. Financial year is coming to an end and my company is including that medical advance in my ctc to deduct tax. Is there anyway so that i can get away with tax calculations since whatever money i spent on my father's illness is a debt? I am already in huge debt so please help me on this issue.
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In PSUs, medical reimbursements are not part of income and hence not taxable to the employees. Discuss with your HR. Pon
Here they are saying that medical re-imbursements are tax deductable and will include in your CTC.
Sir, can you provide/refer any document or any government policy where it is stated that in PSUs medical reimbursement are not part of income.
Dear Amar Singh,

Section 17 (2) of the Income Tax Act, 1961 covers the inclusion of perquisites in taxable salary and also details the expenses that can be excluded i.e., not treated as taxable income

An extract of Section 17(2) is appended

QUOTE

“Perquisite” includes –

………………………………

………………………………

………………………………

Provided that nothing in this clause shall apply to, –

(i) The value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer;

(ii) Any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family (a) In any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees; (b) In respect of the prescribed diseases or ailments in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines:

Provided that, in a case falling in sub-clause (b), the employee shall attach with his return of income a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital;

(iii) Any portion of the premium paid by an employer in relation to an employee, to effect or to keep in force an insurance on the health of such employee under any scheme approved by the Central Government for the purposes of clause (ib) of sub-section (1) of section 36;

(iv) Any sum paid by the employer in respect of any premium paid by the employee to effect or to keep in force an insurance on his health or the health of any member of his family under any scheme approved by the Central Government for the purposes of section 80D;

………………………………

………………………………

………………………………

UNQUOTE

For your information, I am attaching the following two documents:

1. An extract from an Income Tax Circular dated 25th September, 2012 issued by Power Grid Corporation in respect of how they treat valuation of perquisites in respect of Medical Reimbursement for their employees.

2. A more recent Circular dated 20th March 2013 issued by ONGC in respect of Income Tax perquisite in respect of Medical Treatment provided to Employees.

I hope that these would enable you to have a dialogue with your company.

Regards

Raju Bhatnagar

Attached Files
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File Type: pdf Extract from Income Tax Circular of Power Grid Corporation.pdf (13.5 KB, 501 views)
File Type: pdf ONGC - Income Tax perquisite in respect of Medical Treatment provided to Employees.pdf (193.3 KB, 290 views)

CTC concept is not prevalent in PSUs. — — — — — — — — — — — — — — — — - Pon
Mr.Amar,
You'll get an exemption limit of max.upto Rs.15,000/- in a year out of medical bills reimbursed, in excess will be added back & treated as taxable income and IT computed accordingly with other salary income.
You may read some more in this link where the subject was discussed here earlier:
https://www.citehr.com/53734-medical...ny-policy.html
For more clarity on the subject read the attached notes.

Attached Files
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File Type: pdf medicalreibursementundersection 17(2)-Salient infn..pdf (429.2 KB, 283 views)

Dear friend,

Also note these for your IT purposes:

TAX FREE PERKS U/S 17(2):

 Medical benefits provided by the employer in their hospitals/clinics.

 Tea and snacks or free food or beverages provided in office or factory or through paid vouchers which are not transferable and usable only at eating joints

 Facilities of motor cars

 Residential accommodation provided at site

 Facilities of club or health club and similar facilities

 Expenses on telephone including mobile phones

 Employers contribution to staff group insurance scheme

 Scholarship to employees or their children paid by the employer

 Conveyance facilities

 Refresher courses

 Facility of guest house or holiday home

 Entertainment expenses

 Free ration to Armed Forces Personnel

 Perquisites to government employees posted abroad

 Certain perquisites to High Court and Supreme Court Judges

 Rent free houses to certain persons

 Laptop and computers provide by the employer for personal use of employee

 Interest free or concessional loan if the aggregate dose not exceed 20000 in PY

 Periodicals and journals required for discharge of work

 Leave travel concessions as per terms and conditions

Modified Provisions:

 Holiday facilities-Sec.3(7)(ii)

 Free food- Sec.3(7)(iii)

 Gifts - Sec.3(7)(iv)

 Credit card facilities – Sec.3(7)(v)

 Club facilities- Sec.3(7)(vi)
Dear,
I am also employed in a PSU. Be assured and confident that reimbursement of medical expenses are not taxable component either in PSU or private company. Pl refer to Sec.17 of Income Tax Act. Literally also, Only Incomes are taxable not reimbursement of expenses like medical, Traveling expenses etc. Reimbursements are against production of bills, hence are not income therefore not taxable. As simple as that. Where there is a provision of payment of Medical Allowance irrespective of expenses made or not, it is taxable.
AK Jain
I AM BANKER.
1. Please let me know how income tax authorities assure that hospital is approved by government? Which certificate it require from hospital that it is approved by govt?
2. Let I have treated in a govt approved hospital but taking medicine from the market on the prescription of that hospital. Now can I claim tax exemption however not paying to hospital/approved under rule 3a for the medicine.
3. if I am being treated other than those illness which is not covered under rule 3a or i am being treated from private hospital then could i get tax exemption?

I think law has to clear itself. Moreover, there is need to amend the law. Some doctors should also be specified from whom getting treatment should be made tax free. This will be the honour of the doctor.Also we get treatment from the doctor and not by the hospital.

My proposal is please come togather and draft a medical tax free document with suitable amendment for the government for the benefit of the empolyees.

if any thing you feel wrong, I apologize for the same.
regards
No Income Tax on Medical Reimbursement up to Rs. 15,000
Please refer this link,it will give many clarifications to doubtful points.
Author has nicely clarified our doubts.
Medical expenditure reimbursed is non taxable subject to certain conditions.
Ruke 3A of It rules may also be referred in this connection.
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