Income Tax exemption on Medical treatment outside India

Did you know that if the employer incurs expenditure on the treatment of the employee or his family members on medical expenses outside India, it is a tax free benefit under the Indian income tax act.

The amount of expenditure incurred by the employer on travel or stay abroad of the employee or any member of his family* is exempt from tax, when(as defined in Sec 17(2):

  1. Expenses on medical treatment incurred outside India are within the limit prescribed by Reserve Bank of India.
  2. Tax benefit on the expenditure incurred is also available when one attendant who accompanies the patient  in connection with medical treatment. These expenses can be claimed only to the extent prescribed by RBI.
  3. The amount qualifying for the tax exemption would not include expenditure incurred on travel in case of employees whose gross total income(before including such travel expenditure as perquisite) exceeds Rs.1 lakh.

 

For example

Q.Gross Total Income of Ravi is – Rs. 2,50,00

    Travel expenditure incurred on medical treatment- Rs.1,50,000

    Attendant travel expenditure- Rs.25,000

    Expenses incurred are within the limit prescribed by RBI.

Ans:In the example above, since the GTI of Ravi exceeds Rs.1 lakh, the travel expenses of Ravi as well as attendant shall become taxable as salary income.

Meaning of Family for taking tax benefit on medical treatment

  1. The spouse and children of the employee. Children may be dependent or independent, married or unmarried.
  2. Parents, brothers and sisters of the employee, who are wholly or mainly dependent on the employee.

 

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