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reimbursement of 15,000 medical - from 16

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reimbursement of 15,000 medical - from 16

Postby dipcacs » Wed Apr 07, 2010 12:05 pm

Respected all

Reimbursement of medical expenses upto Rs 15,000 is a tax free perquisite. Should it be shown in teh gross salary in form 16 and then allowed as a deduction or there is no need to include this in the gross and no question of deduction at all. If in gross then under which head :

salary under section 17(1)
value of perquisites under section 17(2)
profits in lieu of salary under section 17(3)

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Re: reimbursement of 15,000 medical - from 16

Postby srinivasaraghavan » Wed Apr 07, 2010 3:06 pm

'Salary' from an employer to the assessee is taxable as per section 15 of Income tax Act.

Now, as per section 17(1), 'salary' includes perquisites.
Perquisite as per clause (vi) of section 17(2) includes the value of any other fringe benefit or amenity as may be prescribed. But the proviso to that clause says nothing in that clause is applicable to any sum paid by the employer in respect of reimbursement of medical expenses if the sum does not exceed Rs 15000.

Therefore, as long as the reimbursement doesnot exceed Rs 15000, it is not salary and therefore need not be included in the salary itself. But, if the reimbursement exceeds Rs 15000, then the amount has to be included as salary and deduction to the extent of Rs 15000 has to be shown separately in Form 16.
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Re: reimbursement of 15,000 medical - from 16

Postby dipcacs » Wed Apr 07, 2010 4:24 pm

sir

If it exceeds 15,000 then should it be shown under section 17(1) or 17(2) in the relevant space in form 16 ?

regards

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Re: reimbursement of 15,000 medical - from 16

Postby srinivasaraghavan » Wed Apr 07, 2010 9:25 pm

As 17(1) itself mentions perquisites and 17(2) just an inclusive definition of perquisites mentioned as salary in 17(1) itself, the excess amount over Rs 15000 can be included in 17(1).

But I have come across forms mentioning this amount under 17(2) as well. This is also being accepted without questions.

I follow the first mentioned one. Whatever it is better to follow a consistent system.
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