Reimbursement of medical expenses to salaried employees by their employers does not come under the tax ambit. These expenses include those made for treatment of self as well as family members/dependents. One of these exemptions relates to medical bills and related expenses incurred during the Financial Year by an individual. There are a number of deductions and exemptions allowed under the Income Tax Act. Reimbursement of Medical bills by Employer
Medical allowance shall be fully taxable under the head ‘Income from Other Sources’ in such cases. If medical allowance is received by the employee, such reimbursement can’t be claimed as a deduction from taxable income.
Medical allowance is a fixed amount paid by some employers to their employees on a monthly basis. These deductions and exemptions have been detailed as below Medical Allowance These provisions help in decreasing the tax burden by providing various deductions and exemptions for payment of medical expenditures, insurance premiums, etc. In order to provide some relief to the society at large and individuals in particular from these escalating medical costs, some provisions have been made in the Income Tax Act, 1961. It also states that 72% of the total out-of pocket expenses relate to purchase of medications both before and after medical procedures. The paper points out that the majority of this treatment expenditure (approximately 74%) incurred in India is for outpatient treatment whereas only 26% expenditure relates to in-patient procedures that require hospitalization of 24 hours or more. According to an analysis published by the world’s leading medical journal ‘Lancet’, Indians pay around 78% of their medical expenses out of their own pocket. The main culprits for this include changing food habits and poor lifestyle choices. In recent years, the incidence of health problems and their treatment costs have increased by leaps and bounds all over the world. Medical Bill Tax Exemption is no longer separately available subsequent to the introduction of Standard Deduction from FY 2018-19 onwards.
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