No double taxation on central government pensioners’ medical reimbursements, says CBDT

The Department of Pension and Pensioners' Welfare (DoPPW) recently issued a clarification from the Central Board of Direct Taxes (CBDT) regarding the perceived double taxation of medical reimbursements received by Central Government pensioners.

In the 35th Standing Committee of Voluntary Agencies (SCOVA) meeting, chaired by Minister of State for Personnel, Public Grievances and Pensions (MOS PP), Dr Jitendra Singh, one of the new agenda items taken up for discussion included the alleged double taxation of medical reimbursements.

According to the minutes of the meeting dated May 4, 2026, Central Government pensioners had claimed that medical reimbursements provided to them were being unfairly taxed twice. They also demanded the abolition of this double taxation.

However, the agenda item was reviewed by the Central Board of Direct Taxes (CBDT), which ruled out the possibility of double taxation of medical reimbursements.

What CBDT said

The CBDT clarified that reimbursement is an added benefit provided to pensioners. It is not treated as a part of the pension for taxation.

While the pension received is included under the definition of salary and is taxed under the head "Salaries", medical reimbursements are not included under this head for taxation.

The CBDT has also clarified that medical reimbursements provided by employers against actual expenditure incurred by employees on the treatment of themselves or any of their family members are not treated as a taxable perquisite.

"The reimbursements received by the pensioners on account of the medical expenditure incurred by them are over and above the pension received by them. The reimbursement is distinct from the pension already received and is an added benefit. Therefore, there is no double taxation of the same income," the CBDT said.

"However, the 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 in accordance with the provisions of section 17(2)(b) of the Income-tax Act, 2025 [Clause (ii) of the Proviso to section 17(2) of the Income-tax Act, 1961] is not treated as perquisitem" it added.

Following the CBDT's clarification, the DoPPW closed this agenda item.