Perquisites: Employee's medical facilities

Medical facility provided in a hospital owned or maintained by the employer is not chargeable to tax. Medical facility provided by an employer in a government hospital, approved hospital (if a few conditions are satisfied) or a private hospital (if such private hospital is recommended by the government for the medical treatment of government employees) is not chargeable to tax. Medical insurance premium paid or reimbursement by the employer is not chargeable to tax.

TAXABLE OR TAX-FREE EMPLOYEE'S MEDICAL FACILITY

Any other expenditure incurred or reimbursement by the employer for providing medical facility in India is not chargeable to tax upto ₹ 15,000 in aggregate per assessment year (fixed medical allowance is fully chargeable to tax). Expenditure on medical treatment outside India / out of India is not chargeable to tax, if a few conditions are satisfied. Further, the perquisite in respect of medical facility is not taxable if the employee is a non-specified employee.

VALUATION OF MEDICAL FACILITIES

Before discussing the broad provisions, one should note down the following points:

(1) Fixed medical allowance is always chargeable to tax / fully taxable.

(2) Hospital includes a dispensary, a clinic or a nursing home.

(3) For this purpose ‘family’ means:

• Spouse, children of the individual; and

• Parents, brothers, sisters of the individual, wholly or mainly dependent on him.

(4) The expenditure on medical treatment by the employer may be by way of payment or reimbursement.

(5) The perquisite is taxable in the hands of specified employee, however if the bills are issued in the name of employee and reimbursed by the employer, then it shall be taxable in the hands of all employees.

MEDICAL FACILITY PROVIDED IN INDIA

(1) Medical facility provided to the employee or his family in a hospital, clinic, dispensary or nursing home maintained by the employer is fully exempted.

(2) Reimbursement of medical bill of the employee or his family of -

• Any hospital maintained by Government or Local Authority is fully exempted; or

• Any hospital approved by the Government for its employee is fully exempted.

(3) Payment/reimbursement by employer of medical expenses incurred by an employee on himself/his family in a hospital, which is approved by the CCIT, for the prescribed diseases (like Cancer, TB, AIDS, etc.) Employee must attach with the return of income -

• a certificate from the approved hospital specifying the prescribed disease or ailment for which hospitalisation was required; and

• a receipt for the amount paid to the hospital.

is fully exempted.

(4) Group medical insurance (i.e. Mediclaim) obtained by the employer for his employees is fully exempted.

(5) Any reimbursement by employer of any insurance premium paid by the employee, for insurance of his health or the health of any member of his family is fully exempted.

MEDICAL FACILITY PROVIDED OUTSIDE INDIA

Any expenditure incurred by the employer (or reimbursement of expenditure incurred by the employee) on medical treatment or attempted remediation of a health problem or medical  of the employee or any member of the family of such employee outside India / out of India, is taxable to the conditions given below:

(1) Medical Expenditure: Exempted to the extent permitted by RBI.

(2) Cost of stay abroad (Patient + One Attendant/Care taker): Exempted to the extent permitted by RBI.

(3) Cost of travel (Patient + One Attendant/Care taker): Exempted only when gross total Income of the employee excluding this (cost of travel) perquisite, does not exceed ₹ 2,00,000 p.a.

Taxpoint: In calculation of gross total income ceiling, taxable value of medical treatment perquisite and cost of stay perquisite shall be included.