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Workmen compensation insurance policy

Sabita Sahoo (623 Points)

02 May 2025

How to know company is legally required to provide compensation insurance to its employee so that ITC is available on the premium paid

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Rama chary Rachakonda (Master in Accounts & high court Advocate) (8621 Points)
Replied 02 May 2025

To determine if a company is legally required to provide compensation insurance to its employees and claim Input Tax Credit (ITC) on the premium paid, consider the following:

Legal Requirement - The Employees' Compensation Act, 1923, mandates employers to compensate employees for work-related injuries or illnesses. -

Workmen's compensation insurance is compulsory for employers to protect employees in case of work-related accidents or illnesses.

ITC Eligibility - A company can claim ITC on insurance premiums paid for employee compensation insurance policies, as these are considered business-related expenses. -

ITC eligibility may depend on the specific policy and premium payment details. - According to GST laws, ITC can be claimed on services that are obligatory for an employer to provide to its employees under law.

Determining Applicability - Check if the company has employees who are covered under the Employees' Compensation Act, 1923. - Verify if the company has taken out a workmen's compensation insurance policy to cover its employees. - Review the policy details to ensure it meets the legal requirements and ITC eligibility criteria.

Documents Required - Workmen's compensation insurance policy documents - Premium payment receipts - Employee records and details of employees covered under the policy By confirming the company's legal obligation to provide compensation insurance and verifying the policy details, you can determine if ITC is available on the premium paid.

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