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insurance premium-contribution

chaitanya (Asst Manager finance) (85 Points)

18 January 2008

Hi,

I have a small doubt.

If employer pays insurance premium of employee on his behalf,what is the consequence?

can employee get deduction of such amount after considering such payment made by employer as his income?

(or)

Is it considered as income for him?

(or)

Are there any other things to be discussed with this matter?

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8 Replies

S.Srinivasaraghavan (Chief Financial Officer and Co) (11318 Points)
Replied 19 January 2008

What is the nature of insurance?

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chaitanya (Asst Manager finance) (85 Points)
Replied 19 January 2008

It is Life insurance premium. Sir,please give me a clear idea of this situation.

BASAVARAJ (SERVICE) (37 Points)
Replied 20 January 2008

EMPLOYER/EMPOLYEE CO PAYS AND GET EXPENSE UNDER EMPOLYEE WELFAREA/C FBT @ 20% OF PREMIUM I.E 6.8% TAX TO BE PAID AS FBT IS PAID PREMIUM WILL NOT BE TAXED INTHE INDIVIUALS HANDS MATURITY TAXFREE FOR MORE INFO CALL B S PATIL 9820084635

BASAVARAJ (SERVICE) (37 Points)
Replied 20 January 2008

EMPLOYER /EMPLOYEE SCHEME BOON FOR TAX PLANNING FOR EMPOLYEES ALSO SUPERANRATION ALSO HELPS TO SAVE TAX UPTO 1 LAC FOR THE BENIFIT OF YOUR EMPLOYEES CALL B S PATIL 9820084635

S.Srinivasaraghavan (Chief Financial Officer and Co) (11318 Points)
Replied 20 January 2008

Assuming that the contract of insurance is between the life insurance company and the individual employee, Answers to your question are: If The employer pays premium on behalf of the employee, this will be construed as income to the employee. Employee will have to offer this as income, in such a case the premium is also costrued as paid out of income and is eligible for deduction u/s 80C. No FBT accrues to the employer, as the premium is offered by employee as his income in its entirety.

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(Guest)

when pol taken by co will have conditional asignment i.e if employee work with co for min period of 3 years. as long aspol is not asigned it can not be income inthe hands of employee. as it cannot be perquiste it has to to pay fbt and once fbt is paid on same perqiste in not liable i have copy of opinon from expert on taxtion i have also consulted one more eminent tax lawyer from mumbai in case you are intrested i can make complete prentation to you . my contact no 9820084635 b s patil

S.Srinivasaraghavan (Chief Financial Officer and Co) (11318 Points)
Replied 21 January 2008

Here the question was not regarding policy taken by the employer. Only when the payment of premium on behalf of the employee, when employee is the policy holder. The answer was to the question by the queriest, wha happens if the premium is paid on behalf of employee in such a case.