Medical Allowance (a fixed component in the salary structure) is entirely different from Medical Reimbursement (a claim-based benefit under a flexi benefits plan). The former is taxable; the latter can be partially processed through Zoho Payroll’s reimbursement module, though it no longer carries a tax exemption for employees under current rules.
Since FY 2018-19, the standard deduction of Rs 50,000 (FY 2023-24 onward) replaced the old medical and transport exemptions for salaried employees. Zoho Payroll applies the standard deduction automatically in the TDS computation, reducing taxable income by Rs 50,000 regardless of actual medical expenses claimed.
Medical Allowance is configured as a taxable earning component in the salary structure. The amount is set as a fixed monthly value (common values: Rs 1,250 per month). Since it offers no current exemption, some companies are moving the allocation to Special Allowance to simplify payslip components without any tax impact change.
Medical Allowance is a fixed earning component in a salary structure that is paid monthly to employees for healthcare expenses. Under current income tax rules in India, it is fully taxable and has no separate exemption. Zoho Payroll includes it in TDS computation as part of gross taxable salary.
No. The Rs 15,000 annual medical reimbursement exemption was removed in Budget 2018 and replaced by the Rs 50,000 standard deduction. Medical Allowance as a salary component is now fully taxable. Zoho Payroll applies the standard deduction separately and automatically for all salaried employees.
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