How Do Medical and Conveyance Allowance Limits Affect Tax Exemption?

The maximum medical allowance for tax exemption is Rs. 1250 per month (Rs. 15000 per year). Suppose a company is providing a medical allowance of Rs. 1000 instead of Rs. 1250. Will the employee still get a tax exemption of the maximum of Rs. 15000 (Rs. 1250 x 12) per year, or will they receive Rs. 12000 (Rs. 1000 x 12) as a tax exemption? The same question applies to the conveyance allowance as well.

Thanks...

Employees will get a tax exemption of up to ₹15,000 after the submission of medical bills. It doesn't matter how much the company mentions in the CTC details.

Similarly, in the case of conveyance, employees will receive a tax benefit of up to ₹9,600 per year.

Regards,
Vinod

Hi, @vinodmahadik111!

Just summarizing: So, it means if the company is mentioning Rs. 1000 on the salary slip as a medical allowance, then still, the employee can get a maximum of Rs. 15,000 tax exemption (Rs. 1250 x 12) from his salary instead of Rs. 12,000 (Rs. 1000 x 12) with the condition that he has to show medical bills?

Hi vinodmahadik111! Just summarizing: So it means if the company is mentioning Rs. 1000 on the salary slip as a medical allowance, then still, an employee can get a maximum of Rs. 15,000 tax exemption (Rs. 1250 x 12) from his salary instead of Rs. 12,000 (Rs. 1000 x 12) with the condition that he has to show medical bills?

No, he can claim a tax benefit only up to the amount which he is receiving as a medical allowance/assistance on the production of bills. In this instant case, he can claim a tax exemption up to Rs. 12,000 p.a. but not the maximum prescribed limit.

Pon

It is the maximum limit for tax exemption, not the minimum limit. If your allowances go beyond the maximum limit, then it is 100% taxable with no exemption.

Please help me out with the following points:

1. What is the formula to calculate monthly LTA and Medical Expenses?
2. Do PF and ESIC employees' contributions come under Gross salary?

Regards,
OS