Can I Claim Tax Benefits on Medical Allowance with TDS Already Deducted? Seeking Advice!

My salary structure contains Rs. 1250 per month under 'Medical Allowance'. That amount was paid with my monthly salary, and tax is deducted on that as TDS. Now, at the end of the financial year, I have medical bills of Rs 15,000. Upon submitting the IT Return, can I deduct this Rs 15,000 under any head?

One accountant told me that it has to be processed with the company and no tax benefit is available as it was mentioned as 'Medical Allowance' in the payslips. Please advise.

Thanks,

If any deduction under medical allowance is made from your salary, then it comes under tax benefit. However, if it is paid with your salary, then it is just a salary head used to divide your salary, such as basic, HRA, Transportation Allowance, Education Allowance, LTA, Medical Allowance, etc.

Thanks

Based on my knowledge, the salary head "Medical Allowance" does not provide any tax benefits. However, the "Medical Reimbursement" head can offer tax relaxations if your employer provides relaxations on medical expenses. If your employer is using the term "Medical Allowance" incorrectly, it may not be the right practice.

I suggest you communicate with your employer to use the term "Medical Reimbursement" instead.

Seniors, please advise on this matter.

Thank you.

Regards,
Ashish

My question is regarding the financial year. The employer paid me Rs. 15,000 under Medical Allowances (just a part of my salary) and deducted TDS on it. Now, I have medical bills amounting to Rs. 15,000 on hand. Can I claim a tax benefit and a refund directly from the income tax department by deducting it from the taxable income in the IT return?

Thanks,
JT

It is not possible to claim a tax benefit now, as your TDS has already been deducted, and the Form 16 must have been issued to you showing the Taxable Income from Salary. You cannot alter the Taxable Income certified by your employer.

Taxable Income and Refund Requests

Saji says taxable income certified by the employer cannot be changed. If I have other income, then I can declare it in the IT return. In the same way, can't I request a refund?

Thanks,

JT

I have just talked with my CA, and he told me that we can file the pending amount whether you had claimed through the employer or not. Please consult with a consultant. At the time of refund, the IT officer may ask you for proof of medical reimbursement.

Thanking you,

Regards,
Ashish

It is not Medical Reimbursement; it is Medical Allowance, which the employer must have taken under the head called Income from Salary. Accordingly, the employer has deducted the TDS. Please keep in mind that it is the duty of the employer to deduct tax with regard to salary.

Regards,
Ashish

Yes, I admit that the employer has just deducted the tax from the Medical Allowance; nothing wrong with it. My attempt is to know if there is any possibility to claim the tax exemption directly from the IT department on the same medical allowance, which I didn't get from the employer. Some people told me that I can't; the only possibility was if it was 'Medical Reimbursement' in payslips, but it is 'Medical Allowance' actually. From the responses I am getting here, I think I can still claim the Rs 15,000 for tax exemption from the total taxable income indicated in the Form 16 by the employer. Am I right?

You can claim it. The name does not matter since the intention of the allowance is to reimburse. However, the claim should only be for the amount you have bills for.

You can't claim a deduction for a medical allowance; however, if it was a medical reimbursement, it may be claimed.

You cannot claim the amount now. You would have received a tax benefit if you had submitted the bills to the employer on time. They would have considered the amount paid to you as reimbursement, not an allowance. Under the current provisions of the law, you cannot claim a refund of the tax deducted. The amount is categorized as medical allowance since you did not submit the bills on time. This should serve as a lesson for you to submit the bills promptly to the employer. I hope this clarifies any doubts you may have on the matter.

My situation is that I worked in a company from April to September, and in September, the company shut down its operations. I have been working for one of their clients, and even after September, I continued. The salary used to come from the client, and the closed company was paying me. There was no accountant/HR in the company after September to take care of these things, and that is the reason I could not submit the medical bills. In the end, we didn't receive the Form 16 even after 8 months of the company shutting down.

Thanks,
JT

Medical Allowance and Tax Implications

Medical Allowance is fully taxable as per the Income Tax Act. If a fixed allowance amount is paid as part of your salary monthly, irrespective of your spending on medical expenses, then the allowance is fully taxable unless it is exempted under Section 10 of the IT Act, 1961.

Medical Reimbursement and Tax Exemption

Medical reimbursement is paid when an employee incurs some expenses out of their pocket and claims the same from the employer. In this case, an amount of Rs. 15,000 is exempted. For example, if you incur Rs. 20,000 and the same is reimbursed by the employer, then Rs. 5,000 (20,000 - 15,000) is taxable when computing taxable income under the Income Tax Act, 1961.

I hope this information is helpful. If you have any queries, please email me at [Email Removed For Privacy Reasons].

Awaiting your comments.