Perquisites – Medical Facilities
Introduction
Medical facilities provided by employers to employees or their family members can be tax-free under specific conditions. Taxability depends on the nature, location, and expenditure of the medical benefit.
Tax Treatment of Medical Facilities
- Medical Facilities in India
- Medical facilities in India are Tax-free if provided to the employee or to his spouse, children, dependent parents or dependent siblings in the following cases:
- Treatment in employer-maintained hospitals.
- Treatment in government or approved hospitals for prescribed diseases.
- Treatment for COVID-19 (subject to required documentation)[Notification No. 90/2022, dated 05-08-2022].
- Group medical insurance coverage is provided by the employer.
- Taxable:
- Reimbursements for routine check-ups, medicines, or non-approved treatments.
- Medical Facilities Outside India
- Medical treatment outside India for the employee, spouse, children, dependent parents, or dependent siblings is taxable only if the expenses exceed the RBI-prescribed limit:
- Medical treatment, accommodation for the patient or accompanying individuals.
- The cost of travelling of the employee or any of his family members or any attendant, who accompanies the patient, for treatment outside India shall be taxable as perquisite if the gross total income of the employee, without including therein the expenditure on travelling, exceeds Rs. 8,00,000.
- RBI Limit on Foreign Exchange for Medical Treatment
- USD 250,000 per annum per individual (or equivalent).
- Exceeds limit: Requires RBI approval.
- Health Insurance
- Employer-paid premiums for Central Government or IRDAI-approved health insurance schemes are fully tax-free.
- Reimbursements for employee-paid premiums under such schemes are also tax-free.
- Personal Accident Policy
- Employer-paid premiums: Exempt from tax.
- Reimbursed premiums (paid by the employee): Taxable as perquisite.
- Medical treatment outside India for the employee, spouse, children, dependent parents, or dependent siblings is taxable only if the expenses exceed the RBI-prescribed limit:
- Medical facilities in India are Tax-free if provided to the employee or to his spouse, children, dependent parents or dependent siblings in the following cases: