Medical reimbursement

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Pinkey Chowbey (Querist)
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29 November 2011 An employee of a private limited company claimed medical reimbursement from his employer for treatment of his dependent father. The medical treatment involved placement of a pacemaker which the Hospital did not provide and had to be purchased from outside. The employer while reimbursing deducted TDS on the cost of the pacemaker (reimbursed separately). Is this TDS deduction justified? Is there any relevant case law which may be referred?
Thanks in advance.
CA. Pinky Chowbey

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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29 November 2011 The amount reimbursed in excess of Rs 15000/ -by the employer is taxable in the hands of the employee as the treatment might have not been carried out in a Govt Hospital or an Approved Hospital. As the perquisite is taxable, employer has to deduct tax upon it.

Pinkey Chowbey

Pinkey Chowbey (Querist)
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29 November 2011 Dear Sir,

let me clarify my query further: the treatment was carried out in a Govt Hospital but the pacemaker was purchased from outside as per the Hospital's instructions. In this case is the TDs deduction deduction justified ?

Regards

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H B BHASKAR SHENOY

H B BHASKAR SHENOY (Expert)
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30 November 2011 Pinkey, as far as the employer is concerned, he has reimbursed medical expenses. He is not worried whether you have bought outside or in Hospital. His duty is to deduct tax on your medical reimbursement when it goes beyond 15000 as explained by Shri Paras Bafna.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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30 November 2011 In a situation where the treatment was carried out in the Govt hospital then the employer could have treated the same as an exempt amount.

However, at the time of filing the return you may claim the exemption as the necessary evidences of hospital bills etc are with you, and you are in a position to substantiate the claim and may get the refund of excessive TDS.