Is It Possible to Include Medical Allowance in Salary Without Tax Implications? Seeking Advice

Dear All,

We have a practice of giving a medical allowance as a reimbursement to all our employees. The amount that we consider for this is $1250 per month. Now, I want this to be incorporated as a part of the salary instead of a reimbursement. However, our finance team says it can be done as then it's taxable. As per my understanding, it should not be taxable up to $15,000 per annum.

I am seeking your kind advice on this matter.

With regards,
Swarali

Dear Swarli,

You can pay this amount in payroll. Instead of paying Rs. 1250 per month, kindly pay Rs. 875 per month, and the remaining Rs. 375 will be deducted as tax. During the financial year-end, ask your employees to submit medical bills for Rs. 15,000. If they submit the deducted tax will be paid to them; otherwise, they won't receive anything.

If you have further queries, don't hesitate to email at dasdas27@gmail.com.

Regards,
Dasa

Dear Dasa,

Can you please provide me with your contact number? I would like to talk to you about it.

With regards,
Swarali

Hello,

If they submit bills at the year-end, how can we repay the $375 that is deducted as TDS for every month, as we would be paying TDS to the government every month? How can we return the amount to them which was already paid to departments?

Sudha

Dear Dasa,

Please suggest me in this matter. My company has deducted Rs. 1250 as medical reimbursement from my salary since last month. Is there any process to save this amount?

I asked my HR, and they replied that I should just send a mail requesting to treat this medical reimbursement as a medical allowance (taxable income) instead of deducting it from my salary. They mentioned that by doing so, I will get back this deducted amount. Should I proceed with this?

Please advise me. I am looking forward to your prompt reply on this.

Regards,
Archana