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Taxation of Insurance Premium paid by employer

Mahalingam R (Manager - Finance) (121 Points)

18 January 2011

Dear all:

Can you please give your valuable inputs on the taxability of the following employee benefits provided by the employer:

- Group Medical / accident Insurance Premium paid by the employer for the life insurance of the employee.

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9 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 18 January 2011

Its an perquisite for an employee u/s 17(2)(v).

CA ADY (Chartered Accountant) (43 Points)
Replied 18 January 2011

if the premium is paid under any scheme approved by Govt. or IRDA , it cannot be included as perq's in the taxable salary of an employee. company can claim deduction as an expense. read section 17 carefully.

CA Akshay Kumar Mishra (Chartered Accountant ) (1784 Points)
Replied 18 January 2011

If employer pays any insurance premium on behalf of his employee then it will be regarded as income of the employee and it will be added in the gross salary as perquisite U/s 17(2)(V) . however the following two insurance premium paid by the employer on behalf of employee shall not be taxable for employee:

a) Medical Insurance Premium;

b) Personal Accident Insurance Premium.

Mahalingam R (Manager - Finance) (121 Points)
Replied 18 January 2011

Thanks for reply .....but Group /Personal Accident Insurance Premium included in our CTC (gross) and the same amount deducted from our gross salary...

sudarshan (CA) (745 Points)
Replied 19 January 2011

your employer is right. For CTC it will be added as it is paid by employer . For IT purposes it is included as part of salary and since it is exempt it is deducted

NARENDER PAWAR (CA final Student) (337 Points)
Replied 19 January 2011

it should be exempt from income tax

CA Ashok Prasad (Practitioner) (133 Points)
Replied 03 February 2011

Well, just becoz employer is showing in CTC, it will not become perquisite in hand of employee. Those are just corporate practices.

remaining fact is this. group medical insurance premium is not a perquisite i, but an expense for the employer. then employee contribution is surely part of his income but not a perquisite.

hope i explained it.

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