A medical allowance is an allowance provided under the Income-tax Act, which states that any employee can submit the bills of any medical treatment undergone by him for himself or his family members. The limit for the allowance is Rs. 15,000. The medical allowance may be paid to the employee by the employer irrespective of claims made.
However, there is a difference between medical allowance and medical reimbursement. Now medical reimbursement is the amount reimbursed by the employer to his employee in respect of medical treatment. A maximum of Rs. 15,000 as a medical reimbursement could be claimed as tax-free. Any amount over and above this limit shall be taxable as perquisites. Medical reimbursement can be claimed only if actual expenses have been incurred by the employee or their family.
How to avail tax benefits if any employer doesn’t provide medical reimbursement?
Well, not to worry. You still have section 80D. Health insurance premia paid by an individual for himself or for his family is deductible. The maximum deduction for a financial year is Rs. 25,000/-. However, for senior citizens, the deduction is extended to Rs. 50,000/-.
So, make sure you submit your medical bills and get your medical reimbursement to avail of this benefit in order to save your tax.