Perquisites - Medical Treatment/ Expenditure (Exemptions) - clause (2) of Section 17 - Income Tax - Ready Reckoner - Income Tax

MEDICAL FACILITY NOT A TAXABLE PERQUISITE As per Proviso to clause (2) of Section 17 MEDICAL TREATMENT IN INDIA 1. The perquisite in respect of medical facility provided by an employer in following hospitals/clinic is not chargeable to tax: Hospital owned and maintained by the employer Hospital maintained by Govt. or Local Authority or an Approved Hospital under CGHS Medical facility like prescribed diseases / ailments in a hospital approved by Principal Chief Commissioner or Chief Commissioner shall be fully tax free 2. Health insurance premium: Medical insurance premium paid or reimbursed by he employer for the employee s health under an approved scheme by Central Govt. or IRDA for the purposes of Section 36(1)(ib) is NOT chargeable to tax. Any reimbursement by the employer in respect of any premium paid by the employee to effect an insurance on his family under any approved scheme by Central Govt. or IRDA is also a tax free perquisite 3. Any other facility in India: i. Sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family standard deduction of ₹ 40,000 is allowed. This standard deduction is allowed in lieu of transport allowance and medical reimbursement. [FA 2019 w.e.f. 1-4-2019] MEDICAL TREATMENT OUTSIDE INDIA Any expenditure incurred by the employer on treatment of employee or or his family member outside India shall be tax free perquisite: Medical treatment of the employee or any family member: Exempt to the extent permitted by RBI Stay abroad of the patient and one attendant: Exempt to the extent permitted by RBI Travel abroad of the patient and one attendant: Travel expenses shall be exempt wholly if the employee whose GROSS TOTAL INCOME before including therein the said travel expenditure 2,00,000. CONDITIONS TO BE SATISFIED ARE AS FOLLOWS: Expenditure shall be excluded from perquisite only to the extent permitted by RBI. Expenditure 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 ₹ 2,00,000. Notes Family = Spouse + Children + Dependent [Parents + Brothers + Sisters] Hospital includes a dispensary or a clinic or a nursing home Any amount incurred by the employer on the treatment of COVID-19 of the employee and/or his family member not to be treated as a perquisite [Proviso to section 17(2) w.e.f. AY 2020-21] Amended by Finance Act, 2022. Any medical allowance given by the employer is fully taxable irrespective of the actual expenses If bills are issues in the name of an employee employer makes payment, then it is taxable in the hands of all employees whether specified or not. Fixed medical allowance is always chargeable to tax.