Medical Reimbursement Taxation Guidelines and Employee Benefits Insights

Hi, If medical reimbursement is a part of the salary structure of an employee, can a company pay the medical reimbursement of INR 1,250 every month to that employee along with the salary and adjust the amount when the bill is provided by the employee? In case the bill is not provided, the same can be made taxable.

Dear Gyan,

Surely the company can pay it on a monthly basis and ask for the submission of bills for the financial year by February's end. This way, amounts for which bills are not provided will be made taxable, and the corresponding tax amount will be deducted from the respective employees' March salaries.

Regards,

Amitava Majumder

Dear Amit,

I think up to $1,250 monthly ($15,000 per annum) in medical expenses is completely tax-free, so there is no need for bills. Definitely, if the amount exceeds this, it will be taxable.

Thank you.

I think Amit is right. The entire 15,000/- is not tax-free; only the portion claimed by the employee by providing bills is tax-free. Even if anyone claims expenses exceeding 15,000/- through bills, the excess amount, if reimbursed by the employer, is taxable in the hands of the employee.

Thanks, Amit, for your input.

Re: Medical Reimbursement

The Medical Reimbursement is Tax-Free up to Rs. 15,000/- per annum. Therefore, no bills are required if the company is paying an amount not exceeding Rs. 1,250/- per month.

Vikram

Medical of Rs. 15,000 per annum is non-taxable only on submission of appropriate medical bills; else, the amount becomes taxable.

Dear all,

Can any senior person give the right answer to this? Some have said it's taxable without a bill, while others have responded that bills are not required.

Hi all,

The medical expenses reimbursed by an employer are tax-free in the hands of the employee only when the employee submits bills for the same. It's actually on an annual basis, and the maximum amount is Rs. 15,000. Some employers may decide to pay the sum every month as Rs. 1250 for 12 months and ask the employee to submit bills once a year or quarter or so. The final idea is that the amount reimbursed (Total Rs. 15,000) in excess of bills submitted is taxed. All these provisions were 100% correct until last year.

In the last budget, it was stated that the FBT is abolished, and all benefits are taxable in the hands of the employee.

Can anyone share more info on this regard?

Jay

Hi,

This particular "perquisites" part of the salary is governed by the Income Tax Act. Here, the amount is not taxable if reimbursed by the Employer to the Employee up to INR 15,000 per annum. The word "reimbursement" itself suggests "compensation paid when a claim is made," and here a claim always has to be supported with some evidence of expenses, such as bills, etc.

I cannot say I have spent INR 15,000 on medical treatment, but certainly, I need to prove it with certain documentary evidence. As Fringe Benefit Tax (FBT) has already been abolished, I believe it will be as per the provisions mentioned in the Income Tax Act under the head Salary - Perquisites.

Hi,

If medical reimbursement is a part of the salary structure of an employee, can a company pay the medical reimbursement of INR 1,250/- every month to that employee along with the salary and adjust the amount when a bill is provided by him? In case the bill is provided in the name of the spouse, mother, or children, can the same apply? Will medical reimbursement apply to him?