Medical facilities – Income Tax

Medical facilities :

The following medical facilities will not amount to a perquisite:
(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 in any hospital maintained by the Government/local authority/any other hospital approved by the Government for the purpose of medical treatment of its employees;

(iii) 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 in respect of the prescribed disease or ailments in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines. However, in order to claim this benefit, 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.
Thus, the two types of facilities are covered:

(a) payment by the employer for treatment in a Government hospital and

(b) payment by an employer for treatment of prescribed diseases in any hospital approved by the Chief Commissioner.

(iv) Any premium paid by an employer in relation to an employee to effect an insurance on the health of such employee. However, any such scheme should be approved by the Central Government or the Insurance Regulatory Development Authority (IRDA) for the purposes of section 36(1)(ib).

(v) Any sum paid by the employer in respect of any premium paid by the employee to effect an insurance on his family under any scheme approved by the Central Government for the purposes of section 80D.

(vi) Any sum paid by the employer in respect of any expendi ture actually incurred by the employee on his medical treatment or treatment of any member of his family to the extent of Rs 15,000 in the previous year.

Note: It is important to note that this expenditure need not be incurred either in the government hospital or in a hospital approved by the Chief Commissioner.

(vii) Any expenditure incurred by the employer on the following:

(a) medical treatment of the employee or any member of the family of such employee outside India;

(b) travel and stay abroad of the employee or any member of the family of such employee for medical treatment;

Conditions:

1. The perquisite element in respect of expenditure on medical treatment and stay abroad will be exempt only to the extent permitted by the RBI.

2. The expenses in respect of traveling of the patient and the attendant will be exempt if the employee‘s gross total income as computed before including the said expenditure does not exceed Rs 2 lakh.

Note: For this purpose, family means spouse and children of the individual. Children may be dependent or independent, married or unmarried. It also includes parents, brothers and sisters of the individual if they are wholly or mainly dependent upon him.

Illustration
Compute the taxable value of the perquisite in respect of medical facilities received by Mr. G from his employer during the P.Y.2015-16:

Medical premium paid for insuring health of Mr. G	Rs 7,000
Treatment of Mr. G by his family doctor	Rs 5,000
Treatment of Mrs. G in a Government hospital	Rs 25,000
Treatment of Mr. G’s grandfather in a private clinic	Rs 12,000
Treatment of Mr. G’s mother (68 years and dependant) by family doctor	Rs 8,000
Treatment of Mr. G’s sister (dependant) in a nursing home	Rs 3,000
Treatment of Mr. G’s brother (independent)	Rs 6,000
Treatment of Mr. G’s father (75 years and dependant) abroad	Rs 50,000
Expenses of staying abroad of the patient and	Rs 30,000
Limit specified by RBI	Rs 75,000

Particulars	Rs	Rs
Treatment of Mrs. G in a Government hospital Treatment of Mr. G‘s father (75 years and dependant) abroad Expenses of staying abroad of the patient and attendant Less: Exempt up to limit specified by RBI Medical premium paid for insuring health of Mr. G Treatment of Mr. G by his family doctor Treatment of Mr. G‘s mother (dependant) by family doctor Treatment of Mr. G‘s sister (dependant) in a nursing home Less: Exempt upto Rs 15,000 Add: Treatment of Mr. G‘s grandfather in a private clinic Add: Treatment of Mr. G‘s brother (independent) Taxable value of perquisite	50,000 30,000	– 5,000 – 1,000 12,000 6,000
	80,000 75,000 5,000 8,000 3,000
	16,000 15,000

		24,000

Note: Grandfather and independent brother are not included within the meaning of family of Mr. G.

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