Medical Reimbursement Confusion: Do I Lose Money Without Full Receipts?

Hello,

In my salary structure sheet, there is a Rs. 1250 per month medical reimbursement part. I understand that to claim tax exemption, I would need to submit receipts and bills. My question is, if I do not submit bills or submit bills for less than Rs. 1250, will I get the remaining amount, or will I get nothing else except the bill part?

If you provide the bills, you will receive income tax exemption on that amount. If you do not provide bills, you will have to pay income tax on the medical allowance portion of your salary.

Furthermore, you should verify your company's policy regarding whether they will pay the total medical allowance amount regardless of having bills or if they will only reimburse based on the bills submitted.

The medical reimbursement component, if it is a part of your salary, entitles you to receive it in full, whether the bills/receipts of medical expenses are submitted or not. At the end of the year, for tax calculation purposes, all medical bills submitted during the year, up to a maximum of Rs. 15,000 (Rs. 1250 x 12), will be exempted from the total salary.

You need to understand the difference between reimbursement and allowance. Reimbursement is supported by bills, while an allowance is not. The Income Tax Act exempts Medical Reimbursement from income tax subject to a ceiling of Rs. 15,000/- per annum. On the other hand, medical allowance (not supported by bills) is therefore taxable.

Whether you will get paid or not in case you do not submit bills depends on your contractual terms with your employer.

Trust your query is addressed fully.

A S Bhat

Hi,

Rs. 1250 per month is exempted for individual employees. Apart from that, Rs. 1500 per month can also be exempted under Medical Reimbursement for parents if they are alive.

Regards,
Karthik

No tax exemption is allowed if the supporting bills of family members (self & dependents) are not produced. The remaining amount is taxable. The total limit for tax exemption is Rs. 15,000/- per annum as per the Income Tax Act.