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Rule 3A r.w.s sub-clause (b) of clause (ii) of the proviso to sub-clause (vi) of clause (2) of section 17 How to get a hospital approved so that tax exemptions can be obtained by employee for medical costs incurred by employer in the prescribed treatment.

Expenditure incurred by an employer for an employee or the employee’s family for treatment of any of the diseases or ailments mentioned in Rule 3A is a tax-free perquisite in the Income Tax assessment of the employee provided the hospitals approved by the Chief Commissioner of the income tax department. Diseases classified under Rule 3A of Income Tax Rules are mentioned in this Article.

There is no specific procedure/form to file an application under Rule 3A. Exemption under this rule is provided if the prescribed conditions are fulfilled.

Only need to file on letter head with the below requirements.

If you want to to get your hospital approved under rule 3A of the Income Tax Rules then you have to apply to the Chief Commissioner of Income Tax of your jurisdiction with an application with the evidences that you are satisfying following terms and conditions as appearing in Rule 3A of the Income Tax Rules, 1962

1. If your hospital is other than a hospital for Indian system of medicine and homoeopathic treatment for the purposes of sub-clause (b) of clause (ii) of the proviso to sub-clause (vi) of clause (2) of section 17 then following other terms and conditions:-

1. The building used for the hospital complies with the municipal bye-laws in force. Kindly attach the evidence of above.
2. The rooms are well ventilated, lighted and are kept in clean and hygienic conditions. Kindly attach approved plan showing ventilation and above other requirements and also photographs of hospital and photographs of few rooms.
3. At least ten iron spring beds are provided for patients. Kindly attach certified copy of the the the bill and proof of payment made. Also attach few photographs.
4. At least one properly equipped operation theatre is provided, with minimum floor space of 180 square feet and with a separate sterilisation room. Kindly earmarked in approved plan showing above other requirements and also photographs.
5. At least one labour room is provided, with minimum floor space of 180 square feet, in case the hospital provides medical service for maternity cases.Kindly earmarked in approved plan showing above other requirements and also photographs
6. Aseptic conditions are maintained in the operation theatre and the labour room. Kindly attach affidavit in this regard. Kindly also attach a brief note in this regard.
7. A duty room is provided for the nursing staff on duty. Kindly earmarked in approved plan showing above other requirements and also photographs.
8. Adequate space for storage of medicines, food articles, equipments, etc., is provided. Kindly earmarked in approved plan showing above other requirements and also photographs.
9. The water used in the hospital or nursing home is fit for drinking. Kindly attach the bill of equipments purchased and also water report from duly approved lab.
10. Adequate arrangements are made for isolating septic and infectious patients. Kindly attach affidavit in this regard. Kindly also attach a brief note in this regard.
11. Kindly attach copy of build, payment proof, photographs swing below items, an affidavit and a brief note that the hospital is providing with and maintaining following :—
    1. high pressure sterilizer and instrument sterilizer;
    2. Oxygen cylinders and necessary attachments for giving oxygen;
    3. List of surgical equipments, instruments and apparatus including intravenous apparatus;
    4. a pathological laboratory for testing of blood, urine and stool;
    5. electro-cardiogram monitoring system;
    6. stand-by generator for use in case of power failure.
12. There is at least one qualified doctor available on duty round the clock for every twenty beds or fraction thereof. Please attach duly certified his degree recognised by the Medical Council of India and is registered by the Medical Council of any State.
13. 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. Please attach certified copy of their degree recognised by the Medical Council of India and is registered by the Medical Council of any State and
14. One nurse is on duty round the clock for every five beds or a fraction thereof. Please attach her certificate of a recognised Nursing Council and is registered under any law for the registration of nurses.
15. 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. Please attach their certificate of a recognised Nursing Council and is registered under any law for the registration of nurses
16. 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. Please attach the copy of register first and last page.
17. Copy of Attendance register latest month showing the staff mentioned above.
18. Copy of proof of payment for latest month made to above staff.
19. Copy of appointment letter of above staff.
20. Copy of confirmation letter from above staff
21. Copy of certificate of holding the above requisite qualification duly certified by them.
22. Copies of audited accounts of the assessee for last three years along with audit report and list of directors/ trustees / founders showing names, addresses, qualifications, PAN number.
23. Copy of registration certificate.
24. Copy of memorandum of association/partnership deed/trust deed etc
25. Copies of bank statement.
26. Copies ready books of accounts.
27. Please note that the hospital should specify that the hospital is for the purpose of any one or more of below mentioned prescribed diseases or ailments
    1. Cancer
    2. Tuberculosis;
    3. Acquired immunity deficiency syndrome;
    4. 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. Surgical operation also includes treatment by modern methodology such as angioplasty, dialysis, lithotropsy, laser or cryo-surgery.]
    5. Ailment or disease of the eye, ear, nose or throat, requiring surgical operation;
    6. Fracture in any part of the skeletal system or dislocation of vertebrae requiring surgical operation or orthopaedic treatment;
    7. Gynaecological or obstetric ailment or disease requiring surgical operation, caesarean operation or laperoscopic intervention;
    8. Ailment or disease of the organs mentioned at (d), requiring medical treatment in a hospital for at least three continuous days;
    9. Gynaecological or obstetric ailment or disease requiring medical treatment in a hospital for at least three continuous days;
    10. Burn injuries requiring medical treatment in a hospital for at least three continuous days;
    11. Mental disorder – neurotic or psychotic – requiring medical treatment in a hospital for at least three continuous days;
    12. Drug addiction requiring medical treatment in a hospital for at least seven continuous days;
    13. Anaphylectic shocks including insulin shocks, drug reactions and other allergic manifestations requiring medical treatment in a hospital for at least three continuous days.
28. If your hospital is for Indian system of medicine and homoeopathic treatment for the purposes of sub-clause (b) of clause (ii) of the proviso to sub-clause (vi) of clause (2) of section 17, the Chief Commissioner shall satisfy himself that the hospital fulfils the conditions specified vide Office Memorandum dated the 6th June, 2002, by the Department of Indian Systems of Medicine and Homoeopathy, Ministry of Health and Family Welfare for approval of private hospitals for Indian system of medicine and homoeopathic treatment to Central Government Health Scheme beneficiaries and Central Government employees.