The Central Board of Direct Taxes (CBDT), in a circular issued on 7th December, has clarified that the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer or any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family would not be treated as “perquisite”, and therefore, TDS need not be deducted on the same.
As per Section 17(2) of the Act, perquisites include: i) The value of rent-free accommodation provided to the employee by his employer; ii) The value of any concession in the matter of rent in respect of any accommodation provided to the employee by his employer; iii) The value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases: a) By a company to an employee who is a director of such company; b) By a company to an employee who has a substantial interest in the company; c) By an employer (including a company) to an employee, who is not covered by (a) or (b) above and whose income under the head “Salaries” (whether due from or paid or allowed by, one or more employers), exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds Rs.50,000/-.
However, the following are not included as perquisite,— (i) the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer; (ii) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family— (a) in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees; (b) in respect of the prescribed diseases or ailments, in any hospital approved by the Principal Chief Commissioner or Chief Commissioner having regard to the prescribed guidelines; [(c) in respect of any illness relating to COVID-19 subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf.
“This has been inserted as amendment through Finance Act 2022 with retrospective effect from 01.04.2020 and thus accordingly, applies in relation to the assessment year 2020-2021 and subsequent assessment years. The conditions have been notified vide CBDT Notification No. [S.O. 3703(E)] 90/2022 dated: 05.08.2022,” the circular said.
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