Medical Reimbursement and Medical Allowance are totally different things.
Medical Allowance: It is a fixed monthly allowance paid in your monthly salary and it is added in your taxable income (which means it is taxable).
Medical Reimbursement: As name suggests it is a reimbursement of medical expenses incurred by the employee. In case of Medical Reimbursement, employee is required to submit the cash memos, bills to employer to claim the reimbursement. After verification of bills employer reimburses employee, subject to pre-decided limits. Medical Reimbursement up to Rs. 15000 p.a. is exempt from Income Tax.
Since you are already paying Fixed Monthly Medical Allowance to employees, I would like to suggest you a method by which, employees who are actually incurring medical expenses can save some Income Tax.
Assuming that you are paying Rs. 1000 pm as fixed Medical Allowance, you can change your policy and start paying Medical Reimbursement of Rs. 12000 p.a. Employees will have to submit bills, cash memos to claim the Medical Reimbursement. You will have to maintain the record of each individual employee as regards his limit and actual reimbursement claimed. At the end of the year in case employee has some unclaimed balance in his account, same can be paid as one time Medical Allowance and obviously it will be added in taxable income.
For example an employee claims Rs. 8920 as a Medical Reimbursement during the year. His unclaimed balance is Rs. 3080. He will be paid Rs. 3080 as one time Medical Allowance in the last month and since it is allowance it will get added in his taxable income.
Hope my suggestion works for you.
Please note that, it is employer’s responsibility to pay Medical Reimbursement only against authentic bills, cash memos to claim exemption from Income Tax. This reimbursement is open to audit and scrutiny by both Tax Auditors and IT Dept.
Thanks & Regards
From India, Pune
31Medical Allowance: It is a fixed monthly allowance paid in your monthly salary and it is added in your taxable income (which means it is taxable).
Medical Reimbursement: As name suggests it is a reimbursement of medical expenses incurred by the employee. In case of Medical Reimbursement, employee is required to submit the cash memos, bills to employer to claim the reimbursement. After verification of bills employer reimburses employee, subject to pre-decided limits. Medical Reimbursement up to Rs. 15000 p.a. is exempt from Income Tax.
Since you are already paying Fixed Monthly Medical Allowance to employees, I would like to suggest you a method by which, employees who are actually incurring medical expenses can save some Income Tax.
Assuming that you are paying Rs. 1000 pm as fixed Medical Allowance, you can change your policy and start paying Medical Reimbursement of Rs. 12000 p.a. Employees will have to submit bills, cash memos to claim the Medical Reimbursement. You will have to maintain the record of each individual employee as regards his limit and actual reimbursement claimed. At the end of the year in case employee has some unclaimed balance in his account, same can be paid as one time Medical Allowance and obviously it will be added in taxable income.
For example an employee claims Rs. 8920 as a Medical Reimbursement during the year. His unclaimed balance is Rs. 3080. He will be paid Rs. 3080 as one time Medical Allowance in the last month and since it is allowance it will get added in his taxable income.
Hope my suggestion works for you.
Please note that, it is employer’s responsibility to pay Medical Reimbursement only against authentic bills, cash memos to claim exemption from Income Tax. This reimbursement is open to audit and scrutiny by both Tax Auditors and IT Dept.
Thanks & Regards
From India, Pune
can medical reimbursement be paid on a monthly basis and bills for the same collected by the employee?
From India, Pune
From India, Pune
hi,
As per my experiance with Medical bill in our company, we are submitting bill accordingly get paid for the respectives months means as much amounts bill u submit u will get that reembursted in repctive months salary.
Thanks
Nilesh
From India
As per my experiance with Medical bill in our company, we are submitting bill accordingly get paid for the respectives months means as much amounts bill u submit u will get that reembursted in repctive months salary.
Thanks
Nilesh
From India
Dear All,
Can anyone tell me that if in salary break up medical reimbursement or medical allowance is not taken, so company can give the employee deduction u/s 10 Medical allowance of Rs. 15000/- (Subject to submission of original medical bills)
Pls. reply its urgent.
Thanks & Regards
Anagha
From India, Pune
Can anyone tell me that if in salary break up medical reimbursement or medical allowance is not taken, so company can give the employee deduction u/s 10 Medical allowance of Rs. 15000/- (Subject to submission of original medical bills)
Pls. reply its urgent.
Thanks & Regards
Anagha
From India, Pune
Hi, I joined a new organisation in Dec 2014 mid, where I have medical reimbursement as a salary component.
I wanted to know if the bills submitted could only be for my employment duration with my new organnisation or i could submit the ones for the entire financial year? I am submitting the proofs in my new organisation.
Thanks,
Priya Bhauka.
From India, Jamshedpur
I wanted to know if the bills submitted could only be for my employment duration with my new organnisation or i could submit the ones for the entire financial year? I am submitting the proofs in my new organisation.
Thanks,
Priya Bhauka.
From India, Jamshedpur
Suppose an Employee is eligible for 15,000 INR Medical Reimbursement, but he was without pay for say 15 days in the year, should the medical reimbursement be calculated accordingly?
From India, Calcutta
From India, Calcutta
Last year i am not provide Medical for medical allowance. This year i am notice 2500 deducted from my salary and medical allowance is Zero on new CTC...Please share the reason.
From India, Mumbai
From India, Mumbai
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Medical Reimbursement Format.doc
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