Taxability under salary head section 17(2)(v)
This query is : Resolved
17 April 2013
At First Read out the policy of co. below for query :
-As per the rules of the Company, Life policy shall be assigned absolutely to the insured employee at the end of the first 10 years from the date of inception of the policy or earlier on such terms as may be decide by the company and the employee shall be entitle to receive or enjoy all polic(ies) money for his/her personal benefits after assignment in his/her favor.
In this case the Employer will take deduction under section 37 of IT Act for the premium paid.
But my query is that in this case whether this premium amount is taxable in hands of employee under section 17(2)(iv)as taxable perquisites or not ? keeping in mind employee is not enjoying benefits of policy till absolute assignment after 10 years.
Reply soon with section or case reference.
Thanks.
-As per the rules of the Company, Life policy shall be assigned absolutely to the insured employee at the end of the first 10 years from the date of inception of the policy or earlier on such terms as may be decide by the company and the employee shall be entitle to receive or enjoy all polic(ies) money for his/her personal benefits after assignment in his/her favor.
In this case the Employer will take deduction under section 37 of IT Act for the premium paid.
But my query is that in this case whether this premium amount is taxable in hands of employee under section 17(2)(iv)as taxable perquisites or not ? keeping in mind employee is not enjoying benefits of policy till absolute assignment after 10 years.
Reply soon with section or case reference.
Thanks.
17 April 2013
The policy of the company as well as the Policy of Life Insurance, both are having features of an advance version of Key Man Insurance Policy.
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If risk of claiming expenditure U/s 37 is being borne by the company, it can easily be said that the employee will be liable to tax for the surrender value at the time of assignment of such policy.
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If risk of claiming expenditure U/s 37 is being borne by the company, it can easily be said that the employee will be liable to tax for the surrender value at the time of assignment of such policy.
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25 April 2013
Thanks for your consideration and answer but I would like to ask that "is this amount of premium paid by company will not be taxable in hands of employee till 10 years?"
And in this case the employee is not enjoying personal benefits of policy (like taking loan on policy) but the policy is on name of employee and for the benefit of the employee.
And in this case the employee is not enjoying personal benefits of policy (like taking loan on policy) but the policy is on name of employee and for the benefit of the employee.
25 April 2013
Unless the policy is not a Keyman Insurance Policy, the amount paid as premium will be taxable in the hands of the employees.
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