Valuation of reimbursement of medical expenses/medical facilities by the employer--Instruction regarding

Medical Expense Reimbursements Excluded from Taxable Income if Under One Month's Salary Annually, Includes Dearness Allowance.

The circular addresses the valuation of medical expense reimbursements and facilities provided by employers. It clarifies that ordinary medical facilities or reimbursement of medical expenses provided to employees or their families should not be included in the employee's total income as a taxable perquisite, provided the amount does not exceed one month's salary annually. This definition of 'salary' includes dearness allowance but excludes other allowances or perquisites. This applies to all employees, including managers and directors. The circular reiterates the 1955 instruction and aims to prevent reopening assessments based on previous misinterpretations.