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tax on medical re-imbursement

pawan kumar (student) (93 Points)

13 July 2010

My father is retired from state govt. services and last year undergone heart surgery from pvt. hospital (fortis healthcare). He paid 6 lacs to the hospital for this surgery and submitted the bills to the govt. for re-imbursement. After 14 months the govt. has approved his claim for Rs.5 lacs and shall be paying in near future. Will this re-imbursement be taxable ? if yes ! please guide me to reduce this tax burden.

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4 Replies

pawan kumar (student) (93 Points)
Replied 14 July 2010

Experts ! please reply

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Amir (Learner) (4016 Points)
Replied 14 July 2010

Dear Pawan,

Hope your father turns well soon.

I am not sure pls seek confirmation but most likely - Fortis heathcare is not an approved Hostipal u/s 17(2).

As a result of above the reimbursements in excess of Rs. 15k becomes taxable perquisite for specified employees.

Now if your father is getting any pension or is working in a private sector and his annual salary exceeds Rs. 50k then your father steps into the shoes of specified employee and the above reimbursement becomes taxable in case of your father OTHERWISE(i:e if your father is not getting ANNUAL pension &/or salary in excess of Rs. 50k) THE SAME IS EXEMPT.

It will be taxable under head "Salary" i:e 4,85,000 {5 lacs-15k}

Unfortunately, no special avenues to save tax in such case - If eligible investments were made before the PY then the same can reduced from the above Income.

If Fortis Hospital happens to be approved u/s 17(2) then the entire receipts will be exempt.

PS:- Though you wanted an expert to reply but pls excuse me on this.....

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pawan kumar (student) (93 Points)
Replied 15 July 2010

Thanks Amir

1. My father is retd. haryana govt. employee (A Class) and getting annual pension of Rs.2,20,000/-

2. He is working in a pvt. co. and his annual salary is 6,80,000/-

3. Fortis Mohali is an haryana government approved hospital otherwise the re-imbursement could not be possible.

That is all what I know. Keeping the above facts in mind , please give me your opinion

Amir (Learner) (4016 Points)
Replied 15 July 2010

Dear Pawan,

I think in case of treatment in an approved Hospital, Govt. provides cash less facility on the other hand where treatment is done in an unapproved medical center only then the question of reimbursement arises.

My above thinking goes stronger in the light of the fact that in the present case ur father has not got total amount of medical expenses as reimbursements - I mean out of 6 lacs he has received 5 lacs - I don't think such things happens in case of an approved/empaneled Hospitals.

That's why I said before that please try and seek confirmation from the Finance or Administration department of the Govt. office whether the hospital in question is approved by the Haryana Government for the treatment of its employees or not..

If Yes, then nothing will be taxable out of Rs. 5 Lacs.

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