Dear FM, I-T norm on medical facilities is outdated and needs change

It is amazing that while other provisions of the income-tax law are changed or tinkered with regularity, the one on medical facilities provided to employees is caught in a time warp. The limit of Rs 15,000 that is exempt from income tax in the hands of the concerned employee for non-hospitalization bills picked up by his employer was fixed eons ago, and meanwhile cost of medicines have skyrocketed. The income tax law, as well as our insurance industry, has a hospital fixation—both ruthlessly fob off non-hospital medical expenditure on the grounds perhaps that an avuncular neighbourhood chemist would play ball with employees and give fictitious bills. India is the diabetic capital of the world. Normally diabetes and high blood pressure feed on each other. These health conditions do not require permanent hospitalization but popping of pills, administration of injection routinely in the comfort of one’s home and with the doctor being called in or visited periodically. [caption id=“attachment_2037975” align=“alignleft” width=“380”] AFP image[/caption] The cost per individual normally is in the range of Rs 3,000 to Rs 5,000 per month. Family bonds in India are still strong by and large so much so that many youngsters take care of their parents often stretching their finances in the process. It is the senior citizens with little financial resources at their disposal who more often than not suffer from these health conditions. To fob off such dutiful youngsters with a pittance – anything more than Rs 15,000 of chemists’ bill reimbursed by the employer is taxable – is cruel especially when the government keeps its tryst with prescribing cost inflation index for computing long term capital gains. The point is, if cost inflation index for capital gain computation can be annually increased, there is no reason why monetary limits for various purposes too cannot be increased to accord with the current cost of living and medicines. Of course hospital bills of government hospitals and other approved hospitals picked up by the employer are completely exempt from tax in the hands of the beneficiary employees. But as said earlier it is not possible, or warranted, for a patient to be permanently in hospital for such lifestyle diseases which if not treated with pills and other self-regulation can be life threatening. The insistence on a patient going only to approved hospitals is a black humour to say the least. Family members cannot be expected to browse through the list of approved hospitals in an emergency, which in any case may be far away. Granted the rule has its origins in the avarice of a few black sheep who go to friendly neighborhood hospitals and get a fake bill but the least the government can do is to relax the norm a wee bit and mandate verification of such bills by a government doctor. One hopes the government does not suspect and question his integrity as well. The indulgence shown towards foreign medical treatment flies in the face of India’s accent on positioning itself as a medical tourism destination for which competition is hotting up in the neighborhood. When Americans come to India for a bypass surgery attracted as much by the low cost of the procedure as the efficiency of the Indian hospitals, it does not stand to reason why Indian employees and their families should go abroad to seek medical treatment with employer support and state subsidy in the form of tax sacrifice. The income tax provision in this regard makes a show of being a little tough on the well to do employees by bringing the cost of air-tickets into the tax net but the truth is no employer is magnanimous enough to send his lesser employees for quality medical treatment abroad. Such magnanimity is reserved for promoter directors and their blue-eyed boys.