Is Medical Reimbursement Taxable ?

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Is Income received from Medical reimbursement of Govt. employee’s son suffering from blood cancer is added in total income? In my office One Staff Nurse having son suffering from blood cancer. Her annual income from salary 3,25,000/- for the year 2009-2010. Her Medical reimbursement bill is 7,35,000/- this amount is other than salary income in