Under the Income Tax Act, a medical facility refers to the benefits given by employers to cover employees medical expenses. There are two key terms to understand : one is medical allowance and other is medical reimbursement.
In short, while medical allowance is taxable, medical reimbursement offers tax benefits when proper documentation is provided. This distinction helps employees maximize their tax savings on medical expenses under the Income Tax Act of 1961.
A medical facility calculator is a tool that helps you to calculate the value of medical benefits provided by an employer in India or abroad. It considers various factors such as reimbursements, hospital treatments and insurance premiums.
When it comes to medical benefits provided by an employer, it is essential to understand the taxability of these facilities. Here are a few points to keep in mind:
The taxability of medical facilities given by an employer is determined as follows:
If the medical treatment is given to the employee of their family at a hospital maintained by the employer it is not taxable.
Medical treatment at a hospital run by the government, a local authority or a hospital authorized by the government is also not taxable.
If an employee or their family member receives treatment for a specific condition or disease at a hospital approved by the Chief Commissioner, the expenses are exempt from tax.
If an employer pays any part of the health insurance premium to keep an employee’s or their family’s policy active under a plan recognized by the Central Government or IRDA for section 36(1)(ib), it is not taxable.
If the employer reimburses any part of the health insurance or their family under a plan recognized by the Central Government or IRDA (for section 80D) it is also not taxable.
If an employer spends money on an employee's medical treatment or their family member (excluding specific treatments mentioned earlier), it is not taxable up to Rs.15000. This helps cover basic healthcare costs without adding to the employee’s taxable income.
These provisions allow employees to access medical care abroad without facing extra tax burdens, provided they meet the income limit and approvals.
Here are the benefits of using a Medical Facility Taxability Calculator:
Accurate Tax Calculations: The calculator gives precise tax calculations for medical benefits and avoids mistakes that lead to underpayment and overpaying or overpaying of taxes.
Tax Compliance: It helps users comply with tax laws regarding medical benefits and also lowers the risk of penalties or legal issues.
Cost Savings: By understanding the tax rules, both individuals and employers can optimize their medical benefit benefits and reduce overall costs.
Better Financial Planning: Individuals can plan their finances more effectively with the help of this calculator.
Transparency: It also clarifies the taxability of various medical perks like health insurance and reimbursements.
Error Reduction: The calculator minimizes the risk of mistakes that could result in costly corrections.
Chartered ONE’s Medical Facility Calculator helps users calculate the tax liability on medical benefits. Children’s Education and Hostel Allowance can be claimed only if the employee's children are studying or staying in a hostel. The allowance is available for up to two children and can be claimed for up to a specified limit. This tool ensures that users can accurately calculate and claim eligible allowances to ensure compliance with tax regulations.
Using our Medical Facility Taxability Calculator is easy and helps you estimate your tax deductions in just a few steps. Here’s how to use Chartered ONE’s calculator:
Access the Calculator: Go to Chartered One, click on Tools, then select Calculators and choose Medical Facility Calculator.
Enter your details: Provide information such as financial year, where you have availed medical facility, treatment availed at, and other required information.
Calculate: Once all details are entered, you will get an instant view of your tax deductions.
We provide expert guide also guaranteed maximum refunds on your income tax returns, with additional expenses from you.
File your ITRHere are some common questions we receive from our customers. If you have any additional questions, please don’t hesitate to contact us.
Any employee who receives medical allowances from their employer can use the medical facility calculator. The calculator provides a clear view of taxable and non-taxable amounts.
Many people mistakenly believe that medical reimbursement and medical allowance are the same thing. However, under the Income Tax Act of 1961, they are treated differently for tax purposes.
Medical reimbursement can be claimed up to Rs 15,000 per year. This means that any medical expenses can be reimbursed by the employer up to this permissible limit.
Medical reimbursement is tax-free if the treatment is done in a hospital run by the employer, local authorities, state or central government or any govt-approved or Chief Commissioner of Income Taxa approved hospital.
The maximum deduction for medical allowance is Rs.15,000 per year. For instance, if you spend Rs 38,000 on medical expenses during the financial year, you can claim a tax benefit of only Rs 15,000 regardless of actual expenses. However, in 2018 India’s Finance Minister introduced a standard deduction of Rs.40,000 combining medical reimbursement and transport allowance.
Yes the Chartered ONE Medical Facility Calculator is safe to use. It does not require personal information and does not store your data. Also, you can use this calculator without fear as it ensures privacy and security.