Perks exempt from the salary

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Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2010 If an employer paid LIC premium on life cover of an emplyee upto Rs. 5,000/- as a Diwali Gift. It is taxable in the hands of employee or not???

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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29 December 2010 Gift up to Rs.5000/- not taxable

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2010 Considering the fact that the premium has been paid directly by the employer, I am of the view that this would fall under the category of "obligation of employee met by employer" and would be taxable as a perquisite.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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30 December 2010 As read your query, the word " Diwali gift is mentioned. in this some factors are to be considered

If you are booking the expenses as gift then the applicablity of tax will be as gift

If you are debiting Salary hence the treatment will be yours

Also, Cheque is paid directly to LIC by company or paid cash to Employee this also need to see

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2010 Cheque is paid directly to LIC by company.

Thanks for your prompt reply.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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30 December 2010 Then your treatment is correct, it is taxable only

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