80C DEDUCTION ON THE INSURANCE PREMIUM PAID BY EMPLOYER

[TUSHAR SHARMA]

HI,

OUR COMPANY HAS TAKEN INDIVIDUAL TERM INSURANCE POLICIES FOR THE EMPLOYEES.  PREMIUM PAID BY EMPLOYER IS TAXABLE IN THE HANDS OF EMPLOYEE.  WHETHER EMPLOYEE CAN TAKE THE DEDUCTION U/S 80C FOR THE INSURANCE PREMIUM PAID ? 

[CA Rachit Agarwal]

Your employer must be taking the deduction for the insurance premium paid.

Above all the insurance premium is niether paid by you nor it is being deducted from you account. Hence in our openion such premium would not be eligible for deduc_{tion u/s 80C.}

[CAGOPALJI AGRAWAL]

To my mind, once the premium is taxable in the hands of employee, he would be entitled for deduction.

[VIPIN GARG]

As far as I concern, employee can not take deduction on the insurance premium paid by the employer. U/S 80C, for claiming the deduction of insurance premium, there is a pre condition that, it should be paid by the person who is taking the deduction.

But if the employer is recovering the same from the employee salary then yes the picture is somehow different, then it can be deemed as indirect payment by the employee and employee can take the deduction of such premium.

 

Regards,

VIPIN GARG

[CASeetharaman KC]

I think the deduction would be allowable only if it is paid by the employee. In this case it is paid by the employer and therefore would not qualify for deduction

AI Summary

Deductibility of employer-paid insurance premiums depends on whether the premium is treated as paid by the employee or recovered from salary. Whether employer-paid individual term insurance premiums included in an employee's taxable salary are deductible under 80C. Majority respondents say deduction requires payment by the employee and so is disallowed where the employer pays; an exception is noted where the employer recovers the premium from the employee's salary (deemed payment). A minority view suggests that if the premium is taxed in the employee's hands, the employee may claim the deduction.