If we are including Medical Reimbursement as part of the salary breakdown, and at the end of the year, only Rs. 10,000 worth of bills are received out of Rs. 15,000, how should we manage the taxes at the year-end?
The way to treat this is to add Rs 15,000 (since it is a part of the CTC) to the Gross Income. Thereafter, allow a deduction (under Section 80D) for the amount of bills submitted (up to a maximum of Rs 15,000).
In this manner, in the example cited by you, wherein bills for Rs 10,000 are submitted, the residual amount of Rs 5,000 will be included as taxable income and get taxed accordingly.
Hi, it's included in the salary package, and the IT Act has given an exemption to the extent of Rs. 15,000. If bills are not produced, then the entire amount will be taxable.
Regards,
Vikas Goel
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