Answer:

Income Tax treatment in case of salaried person who are provided with medical benefit by the employer:

Starting from the financial year (2018-19), the Medical Reimbursement u/s 17(2), along with Conveyance Allowance, has been replaced with Standard Deduction. For the current financial year, the amount of Standard Deduction is Rs 40,000.

So, even if there is some reimbursement of medical expenses on normal treatment and medicines, you will not be able to get any tax benefit as the reimbursed amount will be treated as perquisite and will be taxed accordingly.

In case of salaried person who is not provided with any medical benefit by his employer and who does not have any medical insurance policy, no income tax benefit of medical expenses will be available to them.

The whole amount of expenses incurred by the employer will be allowable expenditure to such employer under Income Tax Act.

In case of salaried person who is provided with medical allowances the whole amount will be taxable.

The medical facility in India provided to the employee or his dependent relative (i,e children, spouse, brothers, sister and parents) by his employer will not be chargeable to tax to the extent of the following:

a) Medical facility provided in a Hospital owned/maintained by the employer.

b) Medical facility provided in a Hospital of Central Government/ State Government/ local authority.

c) Medical facility provided in a Private hospital if it is also recommended by the Government for the treatment of Government employees,

d) Medical facility provided for Specified medical facility (given in rule 3A) in a hospital approved by the Chief Commissioner of Income Tax.

e) Health insurance premium – Medical insurance premium paid on behalf of the employee or reimbursed to the employee by the employer is not chargeable to tax in the hands of the employee.

Also, there are some exemptions -

Tax exemption u/s 17:

Tax benefit will be available on any sum paid by an employer in respect of any expenditure actually incurred by an employee on his/her medical treatment or any other member of his/her family in hospitals approved by the Chief Commissioner in respect of following diseases or ailments, as these will not be treated as perquisite:

(a) cancer;

(b) tuberculosis;

(c) acquired immunity deficiency syndrome;

(d) disease or ailment of the heart, blood, lymph glands, bone marrow, respiratory system, central nervous system, urinary system, liver, gall bladder, digestive system, endocrine glands or the skin, requiring surgical operation;

(e) ailment or disease of the eye, ear, nose or throat, requiring surgical operation;

(f) fracture in any part of the skeletal system or dislocation of vertebrae requiring surgical operation or orthopaedic treatment;

(g) gynaecological or obstetric ailment or disease requiring surgical operation, caesarean operation or laperoscopic intervention;

(h) ailment or disease of the organs mentioned at (d), requiring medical treatment in a hospital for at least three continuous days;

(i) gynaecological or obstetric ailment or disease requiring medical treatment in a hospital for at least three continuous days;

(j) burn injuries requiring medical treatment in a hospital for at least three continuous days;

(k) mental disorder – neurotic or psychotic – requiring medical treatment in a hospital for at least three continuous days;

(l) drug addiction requiring medical treatment in a hospital for at least seven continuous days;

(m) anaphylectic shocks including insulin shocks, drug reactions and other allergic manifestations.