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Gurpreet Singh (Software Engineer)     29 July 2013

Medical allowance - medical bills submission

My current company provides me Medical Allowance of Rs. 1250/- every month. To make that amount non-taxable I submitted medical bills for Rs. 16000/- for the months of January, February and March. But in my Form 16, I got exemption for only Rs. 3750/-. 


When I asked the Accountant regarding this, he said firstly we are providing medical allowance and not medical reimbursement. And secondly, we provide an allowance each month, so if you fail to provide a medical bill for that month, then the medical allowance for that month becomes taxable. So, I got exemption for 3 months only - Jan, Feb and Mar, for which I submitted the bills.


But in all my previous companies, we followed the same process. We subtmitted the medical bills for 2-3 months and recieved exemption of Rs. 15000/- for the whole year. They never asked  us to submit bills for each month. I don't remember whether I received medical allowance or medical reimbursement from my previous companies.


When I told the acountant of my current company regarding this, he said that it's a department rule and cannot be altered and I'll have to submit medical bills for each month from now on to avail the exemption. Please guide me on this, whether it's mandatory to submit bills for each month?


 1 Replies

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 )     02 August 2013

It should be termed Medical Reimbursement, not Medical Allowance. This is because allowance per se is taxable in all cases, except those specifically exempted.


For general medical reimbursement, Rs 15,000 is the maximum tax break that an individual can avail of against actual supporting documents.

Let's say that, based on your company rules, you are eligible for medical reimbursement of a month's basic salary. Let's further assume that this is Rs 30,000.

So the amount you are eligible for reimbursement is Rs 30,000.


Now there are two aspects to this situation: you need to submit at least Rs 30,000 worth of medical bills to claim the eligible reimbursement from your employer.

Second, the tax break would only be available for Rs 15,000, though you have provided bills for Rs 30,000.

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