Urgent clarification..assignment of insurance policy

Hi Sowmya, I have worked in Insurance company and these are the generally accepted views.

Insurance policy should be treated as a Perk and there will be a Perquisite tax payable by the employee on it. However tax will depend on the Surrender Value of the policy at the time of assignment, which will be NIL for any term policy. For ULIP, mostly it is NIL if assignment done before end of 3 years. 

Relevant sections - 

Employer claiming tax rebate as business expense - 37 (1)

Perquisite in the hands of employee - 17(2) V

There will be no FBT impact

Thanks a lot sumit for your timely reply..whether the perquisite will be taxed according to the slab rate of the employee or any fixed rate of tax like 20% or 10% is applicable..