Friday, January 27, 2012

Valuation of Medical facilities to salaried person.


on Friday, January 27, 2012

whether the medical reimbursement given to an employee against medical bills submitted by them for Rs. 15000/-(maximum limit) is it taxable or does it have any effect on the gross income of an employee? Is there any exemption to this amount?



Whether to take this income of any employee into account while calculating Income Tax while preparing Form 16.?

Also if the employee claims medi claim policy reimbursement from the employer for the insurance premium paid does this becomes a part of his gross income & whether tds should be deducted in this amount?



Dear Bhatt Ji,

Before answer to your query ,Details of Valuation of Medical Facilities are given hereunder for reference.Following facilities will not be included in Income of employee.
  1. Medical facility provided in a hospital,clinic ,dispensary or nursing home maintained by the employer.
  2.  Reimbursement of medical expenditure by the employer, incurred by employee on his or treatment of his family member.
    • in any govt hospital (including dispensary /clinic or nursing home) or 
    • hospital (including dispensary /clinic or nursing home) maintained by Local authority or approved for govt employees .
  3. Value of medical treatment for prescribed diseases or ailments in any hospital approved by the Chief Commissioner of Income tax.For claiming this benefit the employee needs to attach with his income-tax return a certificate from the hospital specifying the disease or ailment and receipt for the amount paid.(from ay 2008-09 nothing is to be attached with ITR form)
  4. Besides, any sum paid by the employer towards medical reimbursement other than as discussed above is exempt up to Rs.15,000/-. 
  5.  Any portion of premiums paid by the employer for health insurance of the employees(group insurance) under schemes approved by the Government or the Insurance Regulatory and Development Authority.
  6. Any sum paid (reimbursement)by the employer in respect of premium paid by the employee for the health (medi claim policy)of his or his family, under schemes approved by the Government or the Insurance Regulatory and Development Authority that qualifies for deduction under section 80D of the Income-tax Act.
  7. Expenditure incurred by the employer on medical treatment of the employee or his family member for medical treatment.outside India. This includes travel and stay abroad of the employee or the family member plus one attendant who accompanies the patient in connection with the medical treatment. This exemption is subject to the condition that:
    • the expenditure excluded from the perquisite value shall be to the extent permitted by the Reserve Bank of India;and
    • the travel expenditure is excluded only if the gross total income of the employee before including such travel expenditure does not exceed Rs. 2 lakhs. 


so other than above the medical facility is taxable in hands of employee.Treatment amount ,reimbursement , unapproved /non govt Hospital other than as explained in point no 2 above  up to 15000 is not be  included in salary and amount in excess of 15000 is to be included in employee's salary.


Now point wise answer to your queries.


whether the medical reimbursement given to an employee against medical bills submitted by them for Rs. 15000/-(maximum limit) is it taxable or does it have any effect on the gross income of an employee. Is there any exemption to this amount. 



  • As explained above, valuation of reimbursement upto 15000 rs per annum in non approved /non govt hospital is to be taken as nil .so the amount up to 1500o per annum have no effect on gross Income of an employee.Please note that this is under valuation rule and not an exemption.


Whether to take this income of any employee into account while calculating Income Tax while preparing Form 16.?



  • The answer is yes,If the amount is taxable in employee's hand then we have to show it in Form 16.In form 16 ,there is sub part of gross salary part 1(b) "value of perquisites under section 17(2)",so under this head we will show amount taxable from the facility of medical treatment.But if value of medical facility is nil as per above details then nothing is to be shown .Form 12BA for valuation of perquisites is also required to be issued ,where there is a value of perquisites has been added in the income of the employee.
if the employee claims mediclaim policy reimbursement from the employer for the insurance premium paid does this becomes a part of his gross income & whether tds should be deducted in this amount?



  • Amount reimbursement for mediclaim policy by employer , is also exempted as given above ,(point no 6)  hence not to be included  in employee's salary so no TDS is required to be deducted.If any reimbursement which is not covered under above rules then that amount is top be included in employee salary ,tds is also to be deducted and detail are also required to be shown in form 16 and 12BA.
For example RaJiv has taken following medical facilities from his employer .

  1. Treatment form Hospital maintained by employer(appox expenses 100000):Noting is taxable as medical facilty value for Income tax purpose is NIL.
  2. Treatment in Govt Hospital :Hospital bill 2000 and medicine purchased from private shop against treatment in govt hospital:20000:Full 20000+2000 is not to be included in salary as the treatment in govt hospital.
  3. Treatment in pvt Hospital  amount Rs 25000: In this case 15000 is exempted and 10000 is taxable.
so In above example from 147000(100000+22000+25000) only 10000 is taxable in rajiv 's hand and on this 10000 tds is required to be deducted and this 10000 amount will also be shown in Form 16 and form 12BA.
comments invited.

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  1. Your explanation was really wonderful. I just want a simple clarification. I am working in an organization where my Net Salary is 2,40,000. According to my company's flexi benefit plan, all those whose salary is more than 2,50,000 are eligible to claim medical bills. Hence they did not accept my medical bills for this FY (11-12). When I searched in Google, there are no such limitations. However, when I questioned, they asked me to consult my auditor. Do we have a provisions that an individual whose salary is less than 2,50,000 is not eligible for medical reimbursement (tax benefit) as per IT Act 1961. If yes, can you please provide me the provision? Or if No, can you also advise me whether I can sue my company for not following IT rules? Your early answer is much appreciated.
    Thanks and Regards,
    Aruna

    ReplyDelete
  2. Dear Aruna,

    You query is nothing to do with the Income tax rules.Income tax act only explains the conditions under which a person/employee can claim exemption on medical reimbursement.There is no such rules in income tax act/rules where "who is eligible to receive medical reimbursement" has been explained.

    Its is purely a company policy .Companies can drafts their own rules about medical reimbursement.

    ReplyDelete
  3. Thanks for your comments Raja:-) It was helpful.

    ReplyDelete
  4. hi can you please confirm

    if a married female employee can claim the medical bills of her in laws for medical reimbursement (exempted upto rs 15000)

    if a married female can claim the medical bills of her parents for medical reimbursement (exempted upto rs 15000)

    ReplyDelete
  5. As per Income tax rules

    Family means

    a)The spouse and children of the employee and
    B)The parents , brother and sister of the employee or any of them which is wholly and mainly depended on the employee.

    accordingly married female can claim his parents bill for exemption if they are mainly depended on her .
    However he can not claim for her In laws

    ReplyDelete
  6. Sir
    I am posted in judicial services. Heavy expenditure incurred to me during the second delivery of my wife. During the period of delivery in the hospital the lady doctore advised me to immediately take her to appolo hospitals as some heart defect was detected during that. thereafter we immediately shifted her to appolo from that hospital . During this period two bills were generated i.e one at the gynecological hospital and one at appolo hospital.


    My question
    Can I claim exemption of these amount in this financial year of
    a) of both bills
    b) any one of them
    C) None of them

    Rajeev

    ReplyDelete
  7. can anyone provide list of hospitals approved by income tax dept for the fy 2011-12where tax rebate is allowed on treatment

    ReplyDelete
  8. This comment has been removed by a blog administrator.

    ReplyDelete
  9. Hi,

    I need your help to know how do i clain refund for the medical allowance which is part of my salary. My employer deducts tax at source and hence we need to submit the proofs before January 2012 for current fiscal year. I couldn't submit it as i Incurred the expence after Jan 2012. As a result, the medical allowance is not included Allowance to the extent exempt under section 10 in my salary certificate and also my employer has deducted tax for the same. Can you please help me on this and tell the process of refund..



    Thanks
    Chetan

    ReplyDelete
    Replies
    1. you can deduct these amount while filing of your income tax return .but from the fact given by you it appears that you are receiving a fixed medical allowance which is always taxable in employee hand.

      However medical reimbursement up to 15000/- per annum is exempted .
      If you are clear about the nature of your receipt then you can claim this while filing income tax return .

      Delete
  10. Sir,i am working for Maersk Global Service Center India Pvt. Ltd (A P MOLLER GROUP). My question is Can i submit my parents medical bill for tax exemption US80DD, as my parents are dependent on me.

    Regards,
    Sumi Hazarika

    ReplyDelete
    Replies
    1. There is no bar as such ,please check whether you have fulfilled all the conditions given in section 80DD

      http://www.simpletaxindia.net/2012/02/deduction-section-80dd-maint-medical.html

      Delete
  11. we have medical reimbursement facility of Rs.15,000/- but it is link with attendance as imedical reimbursement is part of salary.

    because of this i am not getting full benifit whenver i am going on long leave.

    Please advice

    Thanks

    ReplyDelete
    Replies
    1. This is company policy and not described in Income tax law ,company can set their own policies

      Delete
  12. Hello Raja,

    In financial year 2011-12 I worked with 2 companies(6 Months in each company). In my previous company there was Medical reimbursement and in current compnay it is medical allowance. In both companies I didn't submit medical bills and they paid me Medical reimbursement & medical allowance as taxable. Now I have bills for the financial year 2011-12 of Rs 15000. Can I get tax benifit of Rs.15000 now? Can I show this while filing tax online? If yes do I need to send medical bills along with ITR-V to Bangalore?

    Thanks in Advance..

    ReplyDelete
    Replies
    1. Once it has been shown as taxable the it will treated as allowance not reimbursement and remain taxable .So you can not claim tax benefit on medical reimbursement /allowance in given situation.

      Delete
  13. My employer has not cosidered the medical bills, rent receipts & coveyance amount for exemption & deducted tds for entire amount paid to me as a salary though these comes under exemption, now i want to claim refund from dept of income tax; in which Sections of form 16 I should fill this for claim as a refund.

    ReplyDelete
    Replies
    1. Hra exemption and conveyance allowance exemption can be claimed while filing return .However Medical allowance is not exempted even you have bills .Only medical reimbursement is exempted not medical allowance .

      Delete
  14. Hi. I am Working in a software company on contract basis where i was being given Fomr-16A by the employer. I have incurred aroung 50,000/- of medical expense for my spouse in the FY 2011-12. Can i claim this amount as deduction/exemption in filing my IT Returns. Please advice.. Vijay Kumar J

    ReplyDelete
    Replies
    1. medical treatment is allowed for specific treatment subject to conditions . see details u/s 80DDB

      http://www.simpletaxindia.net/2009/01/deduction-us-80ddb-in-respect-of.html

      Delete
  15. Dear Sir

    Is it necessary to submit medical bills to company for caiming he exemption , I mean to ask onus of rsponcibility is on employer or employee to prove that the said amount is used for medcal purpose. Is there any case law ,pl quote.

    ReplyDelete
  16. Hi,
    I have a querry as my company paid us rs 1250 pm (Rs. 15000 am) as medical reimbursement. If I do not submit medical bills for the same, will they treat Rs 15000 as taxable income??

    ReplyDelete
    Replies
    1. Yes , they should treat it as taxable income , but what will actually they do ,we Can't guess

      Delete
  17. HI,Plz answer,whether medical reimbursement though not actually paid in fy2012-13,can i claim benefit at present,n what is the limit..........

    ReplyDelete
  18. Hi,
    In May 2012, I paid around Rs. 14000 for medical tests prescribed by Doctor. In September 2012, I switched the company and forgot to claim the bills in the previous company.
    Now, in my current company I am told that I cannot claim any medical bills dated before my joining date.
    But in my opinion, the tax rebate is given by IT dept for the whole financial year. So, those bills should not get wasted.
    I have 2 questions now:
    1. Can I still claim these bills? If yes, then in my current company? or during filing my ITR?
    2. Do bills for Medical Tests (not Medicines or treatment) come under this category or not?
    Your reply will help me.
    Thanks in advance.

    ReplyDelete
  19. 15000 amount is available only if you have received reimbursement from your employer .In above query you have not mentioned about the reimbursement by employer.

    If no reimbursement has not been provided by employer then no deduction available.

    ReplyDelete