Salary & Perquisites Hackseasylow riskAnnual1 min readUpdated 26 Jul 2026

Medical Reimbursement ₹15,000: Withdrawn Since AY 2019-20

The ₹15,000 tax-free medical reimbursement was withdrawn by the Finance Act 2018

Potential Savings

₹0 — withdrawn

Time Required

Annual

Complexity

Easy

Legal Status

Fully legal

applicable toSalaried - Old Regime

overview

What is this hack?

If you have read that you can hand your employer ₹15,000 of medical bills before 31 March and take the reimbursement tax-free, that route closed years ago. Section 8 of the Finance Act 2018 omitted clause (v) of the proviso to Section 17(2) with effect from 1 April 2019, and the Memorandum explaining the Bill says in terms that the exemption was withdrawn to fund the reinstated standard deduction under Section 16(ia). A medical reimbursement paid by an employer today is ordinary taxable salary.

how it works

How it works

Until assessment year 2018-19, clause (v) of the proviso to Section 17(2) kept up to ₹15,000 a year of employer-reimbursed medical expenditure outside the definition of "perquisite", so bills handed to the employer came back tax-free. Section 8 of the Finance Act 2018 omitted that clause with effect from 1 April 2019, and the bare text of Section 17(2) now records clause (v) simply as omitted by that Act. The same Act inserted Section 16(ia) — a standard deduction, ₹40,000 at the time and raised since — and the Memorandum explaining the Finance Bill 2018 is explicit that this was the trade: "Consequently the present exemption in respect of Transport Allowance (except in case of differently abled persons) and reimbursement of medical expenses is proposed to be withdrawn." What still survives in the proviso to Section 17(2) is narrower and has nothing to do with submitting bills: the value of treatment in a hospital maintained by the employer, treatment in a Government or approved hospital for prescribed diseases or ailments, treatment relating to COVID-19 on notified conditions, and employer-paid premiums on an approved health insurance scheme. Ordinary chemist bills and consultation fees are covered by none of them. The live relief for a salaried taxpayer's own medical spending is the health insurance premium deduction under Section 80D.

common pitfalls to avoid

Submitting ₹15,000 of medical bills to your employer expecting a tax-free reimbursement
The exemption was removed with effect from assessment year 2019-20. Payroll teams that still run a "medical reimbursement" component are paying ordinary taxable salary under an old label, and older salary-structuring templates and CTC breakups have not all been updated.
Solution: Treat any medical reimbursement line in your CTC as taxable salary and check that TDS is being deducted on it. There is nothing to claim in your return.
Counting the ₹15,000 on top of the standard deduction
The standard deduction under Section 16(ia) exists precisely because the medical reimbursement exemption and the transport allowance exemption were withdrawn to pay for it. Claiming both counts the same relief twice.
Solution: Take the standard deduction and stop there. There is no separate ₹15,000 medical head to add to it.
Assuming every medical benefit from an employer is now taxable
The proviso to Section 17(2) still excludes the value of treatment in a hospital maintained by the employer, treatment in a Government or approved hospital for prescribed diseases or ailments, treatment relating to COVID-19 on notified conditions, and employer-paid premiums on an approved health insurance scheme.
Solution: If your employer runs a group health policy or an in-house medical facility, that benefit is still outside your taxable perquisites. It is the cash reimbursement of ordinary bills that lost its exemption.