INCOME TAX TREATMENT OF MEDICAL EXPENSES REIMBURSEMENT

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INCOME TAX TREATMENT OF MEDICAL EXPENSES REIMBURSEMENT

MEDICAL REIMBURSEMENT

Query 1]

  1. As per income tax law, medical expenses up to Rs.15000/- are exempt from income tax on producing medical bills. Here, I would like to inform you that I & my family members prefers to take Homeopathy treatment for most of the day to day ailments, for which a requisite fees is being paid to Doctor.  When I asked my Doctor to give receipt for the medical expenses being incurred during this financial year (2011-12) for submitting to my employer for tax exemption, he said as per law, Homeopathy doctor’s bill is not allowed for exemption. I request you to confirm if the statement made by the Doctor is true?  Also I request you to confirm if medical bills from Homeopathy Doctor are allowed or not for tax exemption? [Niranjan Shionikar – shionikarnp@hotmail.com]
  2. If I am Central Government Pensioner and drawing Basic Pension : Rs. 19,401, Dearness Relief: Rs. 18,755/-, and Medical Allowance: Rs. 300/- per month. Making my total emolument as pension Rs. 38,456/- per month. Whether Medical Allowance of Rs. 300/- getting per month is taxable or exempt from income Tax?  If it is exempt, whether I have been required to submit the Medical bill for that purpose?[Sohan Lal – Sohanlal2030@yahoo.com]

Opinion:

Very often, the question is raise about the income tax treatment of medical allowances / reimbursement in the hands of the employee. For the mass benefit, we are summarizing the income tax implications in the hands of employee on the medical expenses reimbursement for medical facilities in India.

  1. The fixed medical allowance given to an employee is taxable.
  2. Medical reimbursement done to an employee by an employer is not taxable in the hands of an employee, if treatment of the employee or his family member is done in any of the following hospitals:
    a] Hospital maintained by an Employer
    b] Hospital maintained by Central Government or State Government or Local Authorities
    c] Hospital approved by Government for its employees
    d] For certain prescribed diseases/ailment, hospital approved by the Chief Commissioner of Income Tax.
    The reimbursement in (a) to (d) shall be tax free without any upper ceiling or cap.
  3. In respect of reimbursement of medical expenses reimbursement done to an employee for treatment in any hospital other than those covered in (a) to (d) above, there is a maximum cap of Rs. 15,000/-.
With above basic idea the reply of the queries are as under:
  1. In general, Medical reimbursement up to Rs. 15,000/- is tax free. There is no bar of having an allopathic treatment only for claiming an exemption. Exemption can also be claim for Homeopathic Medical treatment.
  2. Fixed medical allowance is taxable. Subject to maximum cap of Rs. 15,000/-, reimbursement of medical expenses supported by bills / vouchers are exempt from income tax.
Query 2]
Sir, my wife is primary teacher in state Govt. school. Her income from salary is more than Rs. 3.50 Lacs for the F.Y. 2010-11. Out of this, Rs. 1.34 Lacs is arrears of F.Y. 2009-10 but the employer has deducted TDS on this income as Rs. 13,096/- directly through treasury & issued Form No 16 & annexure-A (Detail of treasury deduction). However, this amount could not be refund to us as per section 89 of I.T. Act as her income for FY 2009-10 was Rs. 36,000/-. We filed ITR for the FY 2010-11 manually on 20/5/2011 claiming refund but till date, her employer did not file e-return. Is it possible to get refund if her employer did not file TDS e-return? What can we do for this? Is there any criterion to complaint against her employer? [harshad.boharupi@sbi.co.in]

Opinion:

  1. We have covered the similar issues in our Tax Talk dated 26.03.2012 which you can also refer at ehitavada.com or at www.nareshjakhotia.blogspot.com
  2. For the Assessment Year 2011-12, CBDT has already relaxed the condition by issuing Instruction No. 01/2012 [F.NO.225/34/2011-ITA.II], date 2-2-2012 wherein it has been asked to allow, while processing the income tax return, the TDS credit of the amounts which are not reflected in 26AS statement under certain conditions. You may write a request letter to your Assessing Officer for issue of refund by making a reference to above CBDT Instructions.
Query 3]
Sir, Income tax department, while issuing refunds is adjusting demands of earlier years as per their records. The assessee have already paid these old demands & intimated the facts to the concerned ITO’s but the demand has not been deleted from their records.  Please let me know the procedure for getting refunds of these paid amounts?  Some assessees have filed manual returns & some have filed e returns to CPC, Bangalore. I am sure many people are facing this problem and this is leading to unwanted paper work and harassment to assessee.  Please Guide. [Ajay agrawal-akagrawal87@gmail.com]

Opinion:

There is lot of problem that many Assessees may be facing due to the transitional phase of the I.T. Department from manual to e-environment. As of now, assessee don’t have any option but to make an application to the concerned jurisdictional assessing officer intimating the facts & figures, along with relevant documents/records, of the case to carry out the necessary rectifications. Admittedly, it may be a cumbersome process as the demands in some cases pertains to quiet older period as well. However, wherever the demands or any communication is received from the Income Tax Department, the taxpayers are advised to take it seriously & should immediately comply to avoid the complications/ complexity like this in future.

MEDICAL REIMBURSEMENT


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