Medical reimbursement taxable ? High Court

By Vijay Kumar

DDT had in DDT 491, remarked,

A State Bank of India officer Subhash Banhatti while traveling in a taxi met with an accident. He was admitted in a private hospital which charged him Rs. 3.6 Lakhs which he claimed from is bank. The bank generously granted reimbursement but added the amount t to his taxable income.

PB More, a typist with RBI was asked to pay more tax than what he could afford because he had claimed reimbursement for his son?s treatment.

The Bombay High Court had in 1992 stayed recovery of income tax on such medical reimbursement. But in a recent judgement, the High Court held that reimbursement above Rs.15,000 is a taxable perquisite.

Now employees should be very careful before they check into those fancy private hospitals. If the hospital bill is Rs. 5 Lakhs, you will end up paying Rs. 1.5 Lakhs as income tax. It is sickening to get sick. And what would happen if the employee dies in the hospital? Will there be income tax on the corpse?

Please see the High Court case we are reporting today for more details on the interesting case.