Medical Allowances under Tax Planning Considerations in Respect of Salary Income :

The employer should avoid paying fixed medical allowance. This is taxable fully. Under clause (v) of the proviso to section 17(2), 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 will be exempt to the extent of Rs 15,000. The employer can reimburse the employee as above. Further, he can also provide free medical facilities which are not taxable.