Mukesh Patel.in
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TAX FREE MEDICAL PERKS

 Salaried employees enjoy special tax shelter for various reimbursements of medical expenditure for self & family!

                    Section 17(2) of the Income-tax Act provides for taxability of perquisites in the hands of a salaried employee. In this context, a salaried employee must plan to take the benefit of a number of medical facilities provided by an employer to the employee, which are not treated as taxable perquisites as per the Proviso to Section 17(2), which carves out exceptions to the general rule of taxing perquisites.

  MEDICAL FACILITIES NOT TREATED AS PERQUISITES

The following medical facilities provided by an employer to the employee are not treated as taxable perquisites:

  •  Medical facilities provided in a hospital, clinic or nursing home maintained by the employer.
  • Reimbursement, by the employer of expenditure incurred by the employee on his own medical treatment or the treatment of any member of his family in any hospital, clinic or nursing home maintained by the Government, Local Authority or any other hospital approved by the Chief Commissioner of Income-tax. It needs to be noted that there is no monetary limit prescribed for the amount of reimbursement to be treated as tax free.
  • Mediclaim insurance premium paid by the employer for his employees or reimbursement of such premium to the employees is also tax free.
  • Any expenditure incurred by the employer or reimbursement of such expenditure incurred by the employee, for the medical treatment of the employee or any member of his family outside India, is also treated as tax free, subject to the amount of foreign exchange sanctioned by the Reserve Bank of India. Moreover in the case of an employee, whose total income does not exceed Rs.2,00,000 even the cost of travel and stay abroad of the employee, as well as one attendant would be treated as exempt, if the same has been met by the employer.
  • In regard to general medical treatment in respect of self or any members of his family, reimbursement of medical expenses upto Rs.15,000 in a year received by the employee from his employer is also treated as tax exempt.

SPECIAL DEDUCTION FOR PERSONS WITH DISABILITY

             Under the provisions of Section 80U of the Income-tax Act a Resident Individual suffering from a permanent physical disability (including blindness) or mental retardation, is allowed a deduction of Rs.50,000 in the computation of his Taxable Income.

             A ‘person with disability’ means a person suffering from any disability over 40% (on the same lines as under the Disability Act) as certified by a medical authority. ‘Disability’ for the purposes Section 80U shall include blindness, low vision, leprosy cured, hearing impaired, locomotor disability, autism, cerebral palsy, multiple disability, mental retardation and mental illness as defined under the Disability Act, 1995.

             Moreover, with effect from FY 2009-10, a higher deduction of Rs.1,00,000 (revised from the earlier Rs.75,000) has been provided in case of Persons with Severe Disability over 80%. 

             For claiming this deduction the taxpayer is required to obtain a certificate issued by the Medical Authority under the Disability Act.

             In case of a salaried employee who is entitled to claim the benefit of the above deduction, the Central Board of Direct Taxes has asked employers of such eligible employees to grant them the benefit of this deduction, while calculating the deduction of tax at source (TDS).

 

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