Salaried employees: Income tax exemption being restored on medical reimbursement

ISLAMABAD: The government has decided to restore income tax exemption on the medical allowances/reimbursement received by the salaried employees through amended Finance Bill 2021.

Sources stated that the government has proposed to omit clause (139), Part-I of the Second Schedule (Exemption) of the Income Tax Ordinance 2001.

Under the said clause, exemption is available to any medical allowance received by an employee not exceeding 10 percent of the basic salary of the employee of reimbursement of actual expenses with proof.

FBR says 'no new tax' on salaried class, disagreement follows

The only benefit of medical reimbursement or free medical facility left with salaried class was withdrawn by the government through Finance Bill 2021.

Under the Bill 2021, the government had proposed income tax on their expenditures on medical treatment and allowances.

The sudden withdrawal of the said exemption would take the salaried individuals to the higher slab of income tax, which would increase the burden of taxation on the salaried class, they said.

Copyright Business Recorder, 2021