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(1)If Employer pays for Medical treatment of Employee or his family member, it is exempt to the extent permitted by RBI.
(2) Expenses on stay of patient and one attendant is also exempt to the extent permitted by RBI.
(3) If expenses on Travel paid by Employer , then it is exempt if Gross Total Income of employee (Without Including travel Expenditure) is up to 2 lacs .
QUESTIONS
Q1
Employee received Basic Salary OF 240000(20000 pm)
He was sent for medical treatment out of country
He incurred following expenses which were reimbursed by company
| Expense Name | Amt reimbursed |
| Cost of Medical Treatment | 100000 |
| Cost of Stay | 80000 |
| Cost of Travel | 30000 |
As per RBI,70000 for medical treatment and 60000 for stay is exempt
He had interest income of 5000 on FD
Calculate Income from Salaries and GTI
ViewStep 1
We will calculate GTI without taking travel expense
| PARTICULARS | Amt Recd | Exempt | Taxable |
| Basic Salary | 240000 | 240000 | |
| Medical Treatment | 100000 | 70000 | 30000 |
| Medical Stay | 80000 | 60000 | 20000 |
| INCOME FROM SALARIES(excluding travel expense) | 290000 | ||
| ADD | |||
| INCOME FROM OTHER SOURCES | |||
| Interest Income | 5000 | ||
| GROSS TOTAL INCOME | 295000 |
Since GTI without including travel expense is >200000,travel exp is taxable
Step 2 Calculate GTI including travel expense
| PARTICULARS | Amt Recd | Exempt | Taxable |
| Basic Salary | 240000 | 240000 | |
| Medical Treatment | 100000 | 70000 | 30000 |
| Medical Stay | 80000 | 60000 | 20000 |
| Travel Expense | 30000 | 0 | 30000 |
| INCOME FROM SALARIES(excluding travel expense) | 320000 | ||
| ADD | |||
| INCOME FROM OTHER SOURCES | |||
| Interest Income | 5000 | ||
| GROSS TOTAL INCOME | 325000 |
Q2
Solve Q1 assuming his Basic Salary is 120000(10000 p.m)
ViewStep 1 Calculate GTI without including travel expense
|
PARTICULARS |
Amt Recd | Exempt | Taxable |
| Basic Salary | 120000 | 120000 | |
| Medical Treatment | 100000 | 70000 | 30000 |
| Medical Stay | 80000 | 60000 | 20000 |
| INCOME FROM SALARIES(excluding travel expense) | 170000 | ||
| ADD | |||
| INCOME FROM OTHER SOURCES | |||
| Interest Income | 5000 | ||
| GROSS TOTAL INCOME | 175000 |
Since GTI without including travel expense is <200000,travel exp is exempt
Step 2
Calculate GTI including travel expense
| PARTICULARS | Amt Recd | Exempt | Taxable |
| Basic Salary | 120000 | 120000 | |
| Medical Treatment | 100000 | 70000 | 30000 |
| Medical Stay | 80000 | 60000 | 20000 |
| Travel Expense | 30000 | 30000 | 0 |
| INCOME FROM SALARIES(excluding travel expense) | 170000 | ||
| ADD | |||
| INCOME FROM OTHER SOURCES | |||
| Interest Income | 5000 | ||
| GROSS TOTAL INCOME | 175000 |
--endanswer--
