Is Medical Allowance Really Exempt from Income Tax? Seeking Clarity on Tax Calculations

Dear All, I would like to ask whether the Medical Allowance is exempt from Income Tax or not. To my knowledge, the Medical Allowance is exempt from Income Tax. For example, an employee's salary is 100,000/-. His salary breakup is as follows: Basic Salary 50,000/-, Conveyance Allowance 5,000/-, HRA 35,000/-, Medical Allowance 10,000/-.

Salary yearly: 1,200,000
Adjustment: 600,000
Yearly Tax: 15,000
Monthly Tax: 1,250

As per the above-mentioned tax calculation, the Medical Allowance is not excluded during tax. Is this correct or not? Please guide.

Thank you,
Qasim Raza

Hi,

As per an amendment in the Indian Budget 2018, the tax exemption on medical reimbursement amounting to Rs 15,000 and transport allowance amounting to Rs 19,200 in a financial year has been replaced with a standard deduction of Rs 40,000. This amendment became applicable from FY 2018-19 (i.e., starting 1st April 2018). From FY 2019-20 onwards, the standard deduction has been raised to Rs 50,000 (Amended in Budget 2019).