Confused About Medical Reimbursement Limits: Is It 10% of Salary or Rs. 15,000?

I just joined an HR consultancy services company. I have a question regarding the calculation of medical expense reimbursement. As far as I know, the limit for medical reimbursement is Rs. 15,000/- per annum, which equates to Rs. 1,250/- per month. Upon receiving the salary breakdown from my new company, I was surprised to see the medical reimbursement component listed as Rs. 2,400/- per annum, i.e., Rs. 200/- per month. Upon inquiring about this, I was informed that the component is calculated as 10% of the basic salary offered.

I would like clarification on whether the medical reimbursement should be 10% of the employee's basic salary or if the limit of Rs. 15,000/- as designated by the Income Tax Act is the correct amount. Please advise.

Understanding Medical Reimbursement Limits

Rs 15,000 is the maximum amount allowed under the IT Act. However, this does not necessarily mean that one is automatically eligible to receive this sum. Typically, medical reimbursement is provided instead.

The common practice is for a company to offer one month's basic salary as medical reimbursement. Some companies may provide 10% instead. The exact amount can vary depending on the employee's level within the organization. It is important to note that whatever is specified in the appointment letter holds validity.

It is crucial to understand that there is no legal requirement for any organization to provide medical reimbursement. The IT limit serves the purpose of allowing the maximum reimbursement to be exempted from the salary for IT calculation purposes.

Regards,
Sivasankaran