Understanding Tax Deductions on Medical Expenses Reimbursement

Hello and welcome to Part 4 of the income tax education series brought to you by H&R Block, the global leader in filing income tax returns . Today we will talk about Medical Expenses. Let’s say you get a reimbursement of your medical expenses from your office amounting to Rs 15,000. Is it taxable?

The answer is No. Medical expenses that you get as reimbursement from your employer company are completely tax free, provided you submit your medical expenses bills to your employer as a proof. The amount of tax benefit is restricted to the amount for which bills have been submitted. E.g. Sameer spent Rs. 20,000 in FY 2014-15 as medical expenses on various medicines, check-ups and vaccinations for his kids. He received a reimbursement of Rs. 15,000 from his employer against the bills he submitted. This entire amount of Rs. 15,000 is tax free for Sameer. Shekhar on the other hand spent Rs. 10,000 on medical expenses and submitted these bills to his employer. Although he received the entire Rs. 15,000 as medical expenses reimbursement an amount of Rs. 5,000 (15,000 – 10,000) was taxable as per slab rates applicable to him. This is because tax free amount of reimbursement is restricted to an amount for which genuine bills are submitted.

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