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