Income Tax on Medical Reimbursement, Any Gift, Voucher or Token Given to Employee by Employer under section 17(2) (viii) & Rule 3(7) (iv) Income Tax Act, 1961
As Per Income Tax Act 1961 “Value of any gift, voucher or token Value of any gift, voucher or token” includes:
i) The value of any gift, or voucher, or token in lieu of which such gift may be received by the employee or
ii) By member of his household on ceremonial occasions or otherwise from the employer shall be determined as the sum equal to the amount of such gift.
If the amount of gift is less than Five thousand, then it will not be treated as a taxable perquisite and will be added to the salary of the employee for calculating Income tax on such perquisites
Non Applicability of Section 17(2): Non Taxability of Medical Reimbursement to Employees
- Any 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 such sum does not exceed fifteen thousand rupees in the previous year.
- Medical Treatment by employee including family members at hospital maintained by employer
- Payment for Medical Treatment of employee including family members of employee by employer at Government hospital
- Payment for Medical Treatment of employee including family members of employee by employer at hospital approved by the Chief Commissioner for prescribed diseases or ailments
- Any part of the premium paid by an employer in relation to an employee, to effect or to keep in force an insurance on the health of such employee under any scheme approved by the Central Government
- Payment for Medical Treatment & Expenses of employee including family members of employee by employer for treatment outside India subject to condition that such payment is permitted by the Reserve Bank of India and gross total income of employee is less than Rs 2 lakhs.
Reference: – As Per Section 17(2) (viii) & Rule 3(7) (iv) Of the Income Tax Act 1961
17. For the purposes of sections 15 and 16 and of this section,—
(2) “perquisite” includes—
(viii) the value of any other fringe benefit or amenity as may be prescribed:
Provided that nothing in this clause shall apply to,—
(i) the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer;
(ii) any 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—
(a) in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees;
(b) in respect of the prescribed diseases or ailments, in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines :
Provided that, in a case falling in sub-clause (b), the employee shall attach 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;
(iii) any portion of the premium paid by an employer in relation to an employee, to effect or to keep in force an insurance on the health of such employee under any scheme approved by the Central Government or the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), for the purposes of clause (ib) of sub-section (1) of section 36;
(iv) any sum paid by the employer in respect of any premium paid by the employee to effect or to keep in force an insurance on his health or the health of any member of his family under any scheme approved by the Central Government or the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999),] for the purposes of section 80D;
(v) any 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 other than the treatment referred to in clauses (i) and (ii); so, however, that such sum does not exceed fifteen thousand rupees in the previous year;
(vi) any expenditure incurred by the employer on—
(1) medical treatment of the employee, or any member of the family of such employee, outside India;
(2) travel and stay abroad of the employee or any member of the family of such employee for medical treatment;
(3) travel and stay abroad of one attendant who accompanies the patient in connection with such treatment,
subject to the condition that—
(A) the expenditure on medical treatment and stay abroad shall be excluded from perquisite only to the extent permitted by the Reserve Bank of India; and
(B) the expenditure on travel shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including therein the said expenditure, does not exceed two lakh rupees;
(vii) any sum paid by the employer in respect of any expenditure actually incurred by the employee for any of the purposes specified in clause (vi) subject to the conditions specified in or under that clause :
Provided further that for the assessment year beginning on the 1st day of April, 2002, nothing contained in this clause shall apply to any employee whose income under the head “Salaries” (whether due from, or paid or allowed by, one or more employers) exclusive of the value of all perquisites not provided for by way of monetary payment, does not exceed one lakh rupees.]
- —For the purposes of clause (2),—
(i) “hospital” includes a dispensary or a clinic or a nursing home;
(ii) “family”, in relation to an individual, shall have the same meaning as in clause (5) of section 10; and
(iii) “gross total income” shall have the same meaning as in clause (5) of section 80B;
Income Tax Rule 3(7)(iv)
3. For the purpose of computing the income chargeable under the head “Salaries”, the value of perquisites provided by the employer directly or indirectly to the assessee hereinafter referred to as employee or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules, namely:—
(7) In terms of provisions contained in sub-clause (viii) of clause (2) of section 17, the following other benefits or amenities and value thereof shall be determined in the manner provided hereunder:
(iv) The value of any gift, or voucher, or token in lieu of which such gift may be received by the employee or by member of his household on ceremonial occasions or otherwise from the employer shall be determined as the sum equal to the amount of such gift:
Provided that where the value of such gift, voucher or token, as the case may be, is below five thousand rupees in the aggregate during the previous year, the value of perquisite shall be taken as “nil”.