Rule 18 — Exemption of medical benefits from perquisite value in respect of medical treatment of prescribed diseases or ailments in hospitals approved by the Chief Commissioner. Made under s.17 of the Income-tax Act, 2025.
Rule 18 gives effect to Section 17 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) sets what the Principal Chief Commissioner or Chief Commissioner must satisfy himself of before approving a hospital, other than one for Indian system of medicine and homeopathic treatment, for the purposes of section 17(2)(b)(ii). The hospital must be registered with the local authority and meet sixteen listed requirements: a building complying with municipal bye-laws; rooms well ventilated, lighted, clean and hygienic; at least ten iron spring beds; at least one properly equipped operation theatre of at least one hundred and eighty square feet with a separate sterilisation room; at least one labour room of at least one hundred and eighty square feet if maternity cases are handled; aseptic conditions in the operation theatre and labour room; a duty room for nursing staff; adequate storage space; drinking-fit water; arrangements for isolating septic and infectious patients; the six listed items of equipment — high pressure sterilizer and instrument sterilizer, oxygen cylinders with attachments, adequate surgical equipment including intravenous apparatus, a pathological laboratory for testing blood, urine and stool, an electro-cardiogram monitoring system and a stand-by generator; at least one qualified doctor on duty round the clock for every twenty beds or fraction; at least two qualified doctors on duty round the clock exclusively for an intensive care unit where such facilities are provided; one nurse on duty round the clock for every five beds or fraction; at least four nurses exclusively for every four beds or fraction in an intensive care unit; and a record of health of every patient carrying name, address, occupation, sex, age, date of admission, date of discharge, diagnosis and treatment undertaken.
Sub-rule (2) deals separately with a hospital for Indian system of medicine and homeopathic treatment: approval turns on the conditions in the Office Memorandum dated the 6th June, 2002 issued by the Department of Indian Systems of Medicine and Homeopathy, Ministry of Health and Family Welfare for approval of private hospitals for Central Government Health Scheme beneficiaries and Central Government employees.
Sub-rule (3) lists the prescribed diseases or ailments for section 17(2)(b)(ii): cancer; tuberculosis; acquired immunity deficiency syndrome; a disease or ailment of the heart, blood, lymph glands, bone marrow, respiratory system, central nervous system, urinary system, liver, gall bladder, digestive system, endocrine glands or the skin requiring surgical operation; an ailment or disease of the eye, ear, nose or throat requiring surgical operation; fracture in any part of the skeletal system or dislocation of vertebrae requiring surgical operation or orthopaedic treatment; a gynaecological or obstetric ailment or disease requiring surgical operation, caesarean operation or laparoscopic intervention; an ailment or disease of the organs at clause (d) requiring medical treatment in a hospital for at least three continuous days; a gynaecological or obstetric ailment or disease requiring at least three continuous days of hospital treatment; burn injuries requiring at least three continuous days; mental disorder, neurotic or psychotic, requiring at least three continuous days; drug addiction requiring at least seven continuous days; and anaphylactic shocks including insulin shocks, drug reactions and other allergic manifestations requiring at least three continuous days.
Sub-rule (4) defines "nurse" as a person holding a certificate of a recognised Nursing Council and registered under a law for registration of nurses, "qualified doctor" as a person holding a degree recognised by the Medical Council of India and registered by the Medical Council of any State, and provides that "surgical operation" includes treatment by modern methodology such as angioplasty, dialysis, lithotripsy, laser or cryo-surgery.
Section 17(2)(b)(ii) keeps out of the perquisite value what an employer spends on treating an employee for a prescribed disease in a hospital approved by the Chief Commissioner, but leaves both the diseases and the approval standard unstated. This rule supplies both halves: an inspectable list of physical, staffing and record-keeping requirements the approving authority must satisfy itself about, and a closed list of diseases and ailments. Without it the exclusion would have no measurable boundary and every serious illness in any nursing home could be pressed into it.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Minimum beds | At least ten iron spring beds | Provided for patients in a hospital other than one for Indian system of medicine and homeopathic treatment | Sub-rule (1)(c) |
| Minimum floor space of the operation theatre | One hundred and eighty square feet | At least one properly equipped operation theatre with a separate sterilisation room | Sub-rule (1)(d) |
| Minimum floor space of the labour room | One hundred and eighty square feet | At least one labour room, where the hospital provides medical service for maternity cases | Sub-rule (1)(e) |
| Doctor to bed ratio | At least one qualified doctor on duty round the clock for every twenty beds or fraction thereof | General wards | Sub-rule (1)(l) |
| Doctors for an intensive care unit | At least two qualified doctors on duty round the clock | Exclusively for the intensive care unit, in hospitals providing such facilities | Sub-rule (1)(m) |
| Nurse to bed ratio | One nurse on duty round the clock for every five beds or a fraction thereof | General wards | Sub-rule (1)(n) |
| Nurses for an intensive care unit | At least four nurses for every four beds or fraction thereof | Provided exclusively for the intensive care unit, in hospitals providing such facilities | Sub-rule (1)(o) |
| Minimum hospital stay for the medically treated ailments | At least three continuous days | For ailments of the organs at clause (d), gynaecological or obstetric ailments, burn injuries, mental disorder, and anaphylactic shocks | Sub-rule (3)(h), (i), (j), (k) and (m) |
| Minimum hospital stay for drug addiction | At least seven continuous days | Drug addiction requiring medical treatment in a hospital | Sub-rule (3)(l) |
Two conditions must both hold before section 17(2)(b)(ii) can be used, and they are tested separately: the hospital must be one the Chief Commissioner has approved on these standards, and the disease or ailment must be on the sub-rule (3) list. A famous or well-equipped hospital that has not been approved does not qualify, and an approved hospital does not carry treatment for an unlisted condition. Several entries in the list are conditional on their own facts — clauses (d) to (g) require a surgical operation, and clauses (h) to (m) require a minimum continuous stay — so the same organ or ailment can be inside the list or outside it depending on whether surgery was performed or how long the admission lasted. Note that "surgical operation" is widened by sub-rule (4)(c) to include angioplasty, dialysis, lithotripsy, laser and cryo-surgery, so a procedure that is not open surgery can still satisfy the surgical-operation entries. A hospital for Indian system of medicine and homeopathic treatment is judged not on sub-rule (1) at all but on the 2002 Office Memorandum.
A company pays for an employee's angioplasty at a hospital the Chief Commissioner has approved under sub-rule (1). The heart is an organ listed in sub-rule (3)(d) and angioplasty counts as a surgical operation by force of sub-rule (4)(c), so the condition is a prescribed one and no minimum stay has to be shown. Had the same employee instead been admitted for a cardiac condition treated medically, the expenditure would qualify only if the admission ran for at least three continuous days under sub-rule (3)(h).
An employee meets this rule through the perquisite figure in the salary computation and Form 16 issued by the employer, and through the hospital's approval letter or discharge summary produced if the exclusion is questioned. A hospital meets it directly, in the inspection and the approval order of the Principal Chief Commissioner or Chief Commissioner.
at least ten iron spring beds are provided for patients
there is at least one qualified doctor available on duty round the clock for every twenty beds or fraction thereof
"surgical operation" includes treatment by modern methodology such as angioplasty, dialysis, lithotripsy, laser or cryo-surgery