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Medical Facilities For Employees In India [Provison to Section 17(2)]

• In certain cases medical facilities are treated as tax free. When an employee is granted medical facilities or his family members are granted medical facilities in any hospital, dispensary or nursing home maintained by the employer ,in such a situation medical perquisites are treated as tax-free perquisites.
• In case of reimbursement by the employer of an amount actually spent by the employee for obtaining medical treatment for himself or his family members is a tax free perquisites up to a ceiling of Rs. 10,000/- p.a. This ceiling has been raised to Rs.15,000/- from the assessment year 1999-2000. However in the following cases medical treatment of the employee and his family members shall be fully tax free even if the amount paid or reimbursed exceeds these specified limit of Rs.15,000/- as mentioned above :
  • Actual expenditure incurred by employee on himself or his family's medical treatment in a Government Hospital or in a hospital approved by the Government for its employees.
  • Expenditure incurred by the employee on himself or his family member's medical treatment in respect of prescribed diseases in a hospital approved by the Chief Commissioner of Income Tax. To avail the benefit under this Section the employees has to attach, alongwith his return of income, a certificate from the hospital specifying the disease for which medical treatment was required and the receipt for the amount paid to the hospital.
• Any insurance premium for insurance of the health of the employees under a scheme approved by the Central Government. Any reimbursement by the employer of any insurance premium paid by the employee for insurance of his health or her spouse or dependent parents or dependent children under a scheme approved by the Central Government is also a tax-free perquisite.

Expenditure on medical treatment outside India

• In certain situations expenditure incurred by the employer on treatment of the employee or his family members outside India is treated to be a tax free perquisite.
• Expenses on medical treatment of the employee or any member of his family incurred outside India shall be tax free perquisite to the extent permitted by Reserve Bank of India.
• Expenses incurred on the attendant who accompanies the patient in connection with the treatment of the employee shall also be tax-free perquisite to the extent admitted by Reserve Bank of India.
• Expenses relating to traveling of the patient and one attendant who accompanies the patient shall be tax-free perquisite in the case where the gross total income of the patient does not exceed Rs. 2,00,000/- (Rs. Two Hundred Thousands). In other words, if the gross total income exceeds Rs. 2,00,000/- the traveling expenses of the patient as well as the attendant shall become a taxable perquisite.