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Rule 18Published

Rule 18: Approved hospital and medical-benefit conditions

Rule 18 sets hospital approval requirements and prescribed diseases or ailments for the medical-benefit exclusion in section 17(2)(b)(ii). Both the approval position and the treatment conditions matter.

Official notified Income-tax Rules, 2026

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Rule 18 - Exemption of medical benefits from perquisite value in respect of medical treatment of prescribed diseases or ailments in hospitals approved by Chief Commissioner

(1) In granting approval to any hospital other than a hospital for Indian system of medicine and homeopathic treatment for the purposes of section 17(2)(b)(ii), the Principal Chief Commissioner or Chief Commissioner shall satisfy himself that the hospital is registered with the local authority and fulfils the following requirements:— (a) the building used for the hospital complies with the municipal bye-laws in force; (b) the rooms are well ventilated, lighted and are kept in clean and hygienic conditions; (c) at least ten iron spring beds are provided for patients; (d) at least one properly equipped operation theatre is provided, with minimum floor space of one hundred and eighty square feet and with a separate sterilisation room; (e) at least one labour room is provided, with minimum floor space of one hundred and eighty square feet, in case the hospital provides medical service for maternity cases; (f) aseptic conditions are maintained in the operation theatre and the labour room; (g) a duty room is provided for the nursing staff on duty; (h) adequate space for storage of medicines, food articles, equipments and such other articles is provided; (i) the water used in the hospital or nursing home is fit for drinking; (j) adequate arrangements are made for isolating septic and infectious patients; (k) the hospital is provided with and maintains— (i) high pressure sterilizer and instrument sterilizer; (ii) oxygen cylinders and necessary attachments for giving oxygen; (iii) adequate surgical equipments, instruments and apparatus including intravenous apparatus; (iv) a pathological laboratory for testing of blood, urine and stool; (v) electro-cardiogram monitoring system; and (vi) stand-by generator for use in case of power failure; (l) there is at least one qualified doctor available on duty round the clock for every twenty beds or fraction thereof; (m) in hospitals providing intensive care unit facilities, there are at least two qualified doctors available on duty round the clock exclusively for such intensive care unit; (n) one nurse is on duty round the clock for every five beds or a fraction thereof; (o) in hospitals providing intensive care unit facilities, there are at least four nurses provided exclusively for every four beds or fraction thereof for such intensive care unit; and (p) the hospital maintains record of health of every patient containing information about the patient's name, address, occupation, sex, age, date of admission, date of discharge, diagnosis of disease and treatment undertaken.

(2) In granting approval to any hospital for Indian system of medicine and homeopathic treatment for the purposes of 17(2)(b)(ii), the Principal Chief Commissioner or Chief Commissioner shall satisfy himself that the hospital fulfils the conditions specified 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 Indian system of medicine and homeopathic treatment to Central Government Health Scheme beneficiaries and the Central Government employees.

(3) For the purposes of section 17(2)(b)(ii), the prescribed diseases or ailments shall be the following:— (a) cancer; (b) tuberculosis; (c) acquired immunity deficiency syndrome; (d) 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; (e) ailment or disease of the eye, ear, nose or throat, requiring surgical operation; (f) fracture in any part of the skeletal system or dislocation of vertebrae requiring surgical operation or orthopaedic treatment; (g) gynaecological or obstetric ailment or disease requiring surgical operation, caesarean operation or laparoscopic intervention; (h) ailment or disease of the organs mentioned at (d), requiring medical treatment in a hospital for at least three continuous days; (i) gynaecological or obstetric ailment or disease requiring medical treatment in a hospital for at least three continuous days; (j) burn injuries requiring medical treatment in a hospital for at least three continuous days; (k) mental disorder - neurotic or psychotic - requiring medical treatment in a hospital for at least three continuous days; (l) drug addiction requiring medical treatment in a hospital for at least seven continuous days; and (m) anaphylactic shocks including insulin shocks, drug reactions and other allergic manifestations requiring medical treatment in a hospital for at least three continuous days.

(4) For the purposes of this rule,— (a) "nurse" means a person who holds a certificate of a recognised Nursing Council and is registered under any law for the registration of nurses; (b) "qualified doctor" means a person who holds a degree recognised by the Medical Council of India and is registered by the Medical Council of any State; and (c) "surgical operation" includes treatment by modern methodology such as angioplasty, dialysis, lithotripsy, laser or cryo-surgery.

Introduction

This is a tax treatment guide for employer-paid medical expenditure. It does not determine clinical treatment or mean that every payment to a hospital is automatically excluded from perquisites.

Rule breakdown

Identify the relevant medical-benefit route

Section 17(2)(b)(ii) concerns employer payment of expenditure actually incurred by the employee on medical treatment of the employee or family for prescribed diseases or ailments in an approved hospital. Other medical exclusions in section 17 have their own conditions.

Match the claim to this route and retain the hospital’s relevant approval details, treatment records and actual-expenditure evidence.

Approval requirements for hospitals under sub-rule (1)

The rule requires local-authority registration and the listed premises, equipment, staffing and patient-record standards. These include at least ten beds, the specified operation-theatre space and separate sterilisation room, and the conditional labour-room requirement for maternity services.

The staffing tests include a qualified doctor round the clock for every twenty beds or fraction, a nurse round the clock for every five beds or fraction, and the separate intensive-care requirements. Meeting a few visible facilities does not establish compliance with the complete approval list.

Indian-system and homeopathic hospitals

Sub-rule (2) refers to the conditions in the Department’s Office Memorandum dated 6 June 2002 for the specified hospital approval. Do not replace that route with a claim that sub-rule (1) alone governs every type of hospital.

Confirm the applicable approval and category with the official record. A hospital’s description of its services is not itself evidence of the tax approval.

Disease categories and treatment duration

The list includes cancer, tuberculosis and acquired immunity deficiency syndrome, as well as the specified surgery, orthopaedic and other categories. Read the condition attached to the actual category rather than treating every disease of a named organ as unconditionally covered.

Clauses (h), (i), (j), (k) and (m) require hospital treatment for at least three continuous days. Clause (l), concerning drug addiction, requires at least seven continuous days. The same minimum stay is not stated for every other listed category.

Definitions and supporting records

Sub-rule (4) defines nurse and qualified doctor and includes angioplasty, dialysis, lithotripsy, laser and cryo-surgery within surgical operation. The statutory qualification wording should be checked with the applicable registration framework rather than replaced with guessed terminology.

The hospital must maintain the patient information described in sub-rule (1)(p). For the tax file, retain appropriate bills, evidence of payment, admission and discharge dates and records identifying the prescribed treatment category.

Illustrative duration check

Hypothetical: a claim relies specifically on clause (j) for burn injuries. Two days of hospital treatment do not meet that clause’s at-least-three-continuous-days condition. This does not decide whether another independently applicable medical exclusion is available on the facts.

A separate claim under clause (l) must be checked against seven continuous days; substituting the three-day condition would be incorrect.

Key takeaways

Check approval

The applicable Principal Chief Commissioner or Chief Commissioner approval is part of the parent provision.

Different hospital categories

Sub-rules (1) and (2) use different approval frameworks for ordinary hospitals and Indian-system or homeopathic hospitals.

Read each disease condition

Some listed categories require surgery or a specified continuous period of hospital treatment.

Practical checklist

  • Confirm the relevant hospital approval.
  • Match the treatment to its exact listed category.
  • Retain actual-expenditure and treatment-duration evidence.

Avoid

  • Do not treat every hospital bill as exempt.
  • Do not apply three days to every listed disease.
  • Do not confuse a tax condition with clinical advice.

FAQs

Does the same minimum hospital stay apply to every category?

No. Certain clauses require at least three continuous days, drug addiction requires at least seven, and other clauses use their own stated conditions.

Are Indian-system hospitals addressed separately?

Yes. Sub-rule (2) refers to the specified 6 June 2002 Office Memorandum approval conditions.

Is an approved hospital alone sufficient for this route?

No. The relevant parent provision, prescribed disease or ailment and actual-expenditure and treatment conditions must also be satisfied.

Glossary

Prescribed ailment
A disease or ailment falling within the list and attached conditions in sub-rule (3).
Continuous hospital treatment
The uninterrupted treatment duration required by the particular listed clause.
Approval
The hospital approval required under the applicable statutory route.

Official sources