Write a note on the Medical, Hospital charges or Allowance

1. Employee Case :-

a) If an employee receives free medical treatment or hospitalization from the employer, such benefit will be exempt from tax.

b) If an employee receives re-reimbursement of medical expenses under the terms of employment such expenses will be exempt  from tax.

c)   If medical allowances are given then 10% of the basic salary is exempt from tax. Other than employee.

In this case personal expenditure on medical service is exempt up to 10% of the basic salary.

Conditions :

·        Name of the practitioner and address

·        National tax number of the clinic or hospital should be given on the bill.

·        Bills should be certified by the employer.

2. Entertainment Allowance :-

Following are the important rules regarding the above allowance :

a) If an employee spends the amount on entertainment and this amount is re-imbrued by the employer then such amount is not taxable.

b) If entertainment like tea and coffee provided to the employee at the office during the working hours is not taxable.

c)    Except the above cases entertainment allowance is taxable.

3.      Special Allowance :-

While performing the official duties some allowance are provided to the employee to meet such expenses. These expenses are called special allowances. These allowances are not taxable.

4.      Loan To Employee :-

If any receives the loan from his employer without profit or at the lower rate than the benchmark rate then following rules shall be applied :

a) No Profit :  In this case profit will be calculated according the benchmark rate and it is included in the salary.

b) Profit rate paid is less : If profit is paid less than the benchmark rate then this difference will be included in the salary head.

5.      Utilities Allowance or Fee Provision Of Utilities :-

Following items are included in the utilities :

·        Electricity

·        Gas

·        Water

To meet above expenses employer pays some amount to the employee which is called utilities allowance. Such amount is not taxable up to 10% of the minimum time scale.