Medical allowance is a set monthly payment granted to employees of a corporation regardless of whether they present bills to verify the expense or not. Medical reimbursement, however, is a payment paid to workers for particular medical expenses presented by them, subject to entitlement. If employees wish to claim tax advantages, they must submit bills for the corresponding amount under medical reimbursement every month. Medical allowance is not classified as an exemption allowance under the IT Act of 1961. As a result, a medical allowance is a monthly set compensation supplied by an employer that is completely taxed. Employees can claim a tax deduction of up to Rs. 15,000 for medical expenses.
Before understanding the taxability, it is essential to keep in mind the following points:
The taxable value of medical facilities given by an employer to his employee is computed as follows:
Medical treatment supplied to an employee or a member of his family at any hospital maintained by the company is not taxable.
Treatment at a hospital administered by the government, a local authority, or any other hospital authorised by the government.
Medical care offered to an employee or any of his family members in a hospital approved by the Chief Commissioner for diseases listed in Rule 3A is exempt from taxation.
ny portion of the premium paid by an employer to retain his employees or any of his family members' health insurance policy in effect under a programme recognised by the Central Government or IRDA for the purpose of section 36(1)(ib) is not taxable.
Any portion of the premium paid by an employer to retain a health insurance policy in place for his employee or any of his family members under a programme recognised by the Central Government or IRDA for the purposes of section 80D is not taxable.
Any sum spent by the employer in respect of an employee's medical treatment or treatment of any of his family members (excluding treatment referred to in (a) and (b)) is not taxable up to Rs 15000/-.
Many people confuse the ‘terms medical reimbursement' and 'medical allowance,' believing they imply the same thing. However, according to the Income Tax Act of 1961, the phrases contain several tax treatments. While medical allowance is entirely taxable, medical reimbursement is exempt from tax up to Rs. 15,000. The exemption for medical expenditures should be allowed even if the payment came before the spending. If an employee receives an allowance instead of reimbursement for medical treatment overseas, the allowance will be deemed a taxable component of the employee's compensation.
A medical facility calculator helps you calculate the medical facilities an employee has received from an employer in India or outside India.
Children's Education and Hostel Allowance can be claimed only by individuals who have their children in a hostel or are studying. It is allowed up to a specified amount for a maximum of two children
|Medical facilities in India|
|Medical Expenditure paid or reimbursed by employer||1,00,000|
|Exempt up to||15,000|
Any employee who has received or is receiving medical allowances from the employer is eligible to use the medical facility calculator.
Medical reimbursement can be claimed up to a maximum of Rs.15,000 per year.
Medical reimbursement will be tax-free if the hospital is run by the employer, local authorities, the state government, or the federal government, or if it is approved by the government or the Chief Commissioner of Income Tax.
The highest amount that may be claimed as a medical allowance deduction is Rs.15,000 per year. As a result, if you have incurred medical charges of, say, Rs.38,000 over the course of a financial year, you must submit your medical invoices and receive a tax advantage of Rs.15,000. Your tax deduction is restricted to Rs.15,000 regardless of how much you spend on medical treatments. However, Arun Jaitley, India's Finance Minister, proposed in Budget 2018 that a standard deduction of Rs.40,000 be given for both medical reimbursement and transportation allowance, with both being combined.
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