CA Aashish Ramchand

 Valuation of medical facilities – Before discussing the broad provisions, we should keep in mind the following points –

1. Fixed medical allowance is always chargeable to tax.

2. For the purpose of valuation of the perquisite in respect of medical facilities, “family” means –

a) The spouse and children of the individual; and

b) The parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual.

MEDICAL FACILITIES IN INDIA – The provisions are given below –

1. The perquisite in respect of medical facility provided by an employer in the following hospitals/clinic is not chargeable to tax –

a) Hospital owned/maintained by the employer.

b) Hospital of Central Government/ State Government/ local authority.

c) Private hospital if it is also recommended by the Government for the treatment of Government employees,

d) Specified medical facility (given in rule 3A) in a hospital approved by the Chief Commissioner.

2. Health insurance premium – Medical insurance premium paid on behalf of the employee or reimbursed to the employee by the employer is not chargeable to tax in the hands of the employee.

3. Any other facility in India – Any other expenditure incurred or reimbursed by the employer for providing medical facility in India is not chargeable to tax up to Rs. 15,000 in aggregate per assessment year (fixed medical allowance is fully chargeable to tax).

MEDICAL FACILITIES OUTSIDE INDIA – Any expenditure incurred by the employer (or reimbursement of expenditure incurred by the employee) on medical treatment of the employee or any member of the family of family of such employee outside India subject to the conditions given below –

               Perquisite not chargeable to tax                            Conditions to be satisfied
  • Medical treatment of employee or any member of family of such employee outside India

 

  • Cost on travel of the employee / any member of his family and one attendant who accompanies the patient in connection with treatment outside India
Expenditure shall be excluded from perquisite only to the extent permitted by the Reserve Bank of IndiaExpenditure shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including therein the expenditure on travelling, does not exceed Rs. 2,00,000*

*Employee should obtain a certificate from the hospital which should specify nature of disease as well as amount of expenditure.

            Perquisite not chargeable to tax                       Condition to be satisfied
  • Cost of stay abroad of the employee or any member of the family for medical treatment and cost of stay of one attendant who accompanies the patient in connection with such treatment
Expenditure shall be excluded from the perquisite only to the extent permitted by the Reserve Bank of India

(Author is CA by profession &   Co-Founder of  Make My Returns (www.makemyreturns.com) & can be reached at connect@makemyreturns.com)

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