In the following cases, medical facility is not a perquisite and thus not taxable in the hands of the employees.
1. Medical facility in a hospital, etc. maintained by the employer:
The value of medical treatment provided to an employee or to any member of his family in any hospital, dispensary or a clinic or a nursing home maintained by a employer shall not be a perquisite.
2. Medical treatment in India
The following expenditure incurred by employer shall not be a perquisite:
(a) Any sum paid by employer in respect of:
(i) actual expenditure incurred by employee on his or his family member's medical treatment in any hospital maintained by the Government or any local authority or in a hospital approved by the Government for medical treatment for its employees;
(ii) expenditure actually incurred by employee on his or his family member's medical treatment in respect of prescribed diseases or ailments as prescribed in rule 3A of the Income-tax Rules, in any hospital approved by the Principal Chief Commissioner or Chief Commissioner of Income-tax, having regard to the prescribed guidelines.
However, in this case, the employee has to attach along with his return of income, a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital.
(b) Any portion of insurance premium paid by the employer for insurance of the health of the employees under a scheme approved by the Central Government or the Insurance Regulatory and Development Authority.
(c) Any reimbursement by the employer of any insurance premium paid by the employee, for an insurance for his health or the health of any member of his family a scheme approved by the Central Government or the Insurance Regulatory and Development Authority is also a tax-free perquisite.
3. Medical treatment outside India
The following expenditure incurred by employer on treatment of the employee or his family members outside India is also a tax-free perquisite:
1. Expenses on medical treatment of the employee or any member of his family outside India. However, such expenses shall be tax free perquisite to the extent permitted by Reserve Bank of India.
2. Expenses on stay abroad of the employee or any member of his family for medical treatment with one attendant who accompanies the patient in connection with such treatment. These expenses shall also be tax free perquisite to the extent permitted by Reserve Bank of India.
3. Travel expenses of the patient (employee or his family member) and one attendant who accompanies the patient in connection with such treatment. It shall be tax-free in the case of those employee whose gross total income (before including therein the such travel expenditure as perquisite) does not exceed ₹2,00,000. In other words, if the gross total income of the employee before including the taxable medical perquisite on account of travel expenditure exceeds ₹2,00,000, the expenses on travel of the patient as well as of the attendant shall become taxable.
Note :
(1) Any medical allowance given by the employer is fully taxable irrespective of the actual expenses which might have been incurred by the employee on medical treatment.
(2) 'Family' for the purpose of valuation of medical facilities means:
(i) the spouse and children of the employee. Children may be dependent or independent, married or unmarried.
(ii) parents, brothers and sisters of the employee, who are wholly or mainly dependent on such employee.
(3) 'Hospital' includes a dispensary, a clinic, a nursing home.
(4) As per Circular No. 603 dated 6.6.1991, the expenditure on medical treatment by the employer may be by way of payment or reimbursement.
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