Section 36(1)(ib) of the Income Tax Act, 1961 allows a deduction for the insurance premium paid by an employer to effect or keep in force an insurance on the health of his employees under the scheme framed by the General Insurance Corporation of India (GIC) or any other insurer approved by the Insurance Regulatory and Development Authority (IRDA).

The deduction is allowed for the premium paid by any mode other than cash under Income Tax Act. The premium paid must be for a scheme that provides medical benefits to the employees and their dependents. The scheme must be approved by the GIC or IRDA.

The deduction is available to all employers, irrespective of the size of their business. The amount of deduction is limited to 10% of the salary paid to the employees.

Here are some of the key points to keep in mind about the deduction for insurance premium on health of employees under section 36(1)(ib) under Income Tax Act:

• The deduction is available for the premium paid by any mode other than cash.
• The premium must be for a scheme that provides medical benefits to the employees and their dependents.
• The scheme must be approved by the GIC or IRDA.
• The deduction is available to all employers, irrespective of the size of their business.
• The amount of deduction is limited to 10% of the salary paid to the employees

FAQ QUESTIONS

• What is section 36(1)(ib) under Income Tax Act?

Section 36(1)(ib) of the Income Tax Act allows a deduction for the premium paid by an employer to effect or keep in force an insurance on the health of the employees under the scheme framed by the General Insurance Corporation of India (GIC) or any other approved insurer.

• Who can claim the deduction under Income Tax Act?

The deduction can be claimed by any employer, whether it is a company, a partnership firm, or a sole proprietorship.

• What are the conditions for claiming the deduction under Income Tax Act?

The following conditions must be satisfied in order to claim the deduction under Income Tax Act:

* The premium must be paid by any mode other than cash.

* The insurance must be taken under a scheme framed by the GIC or any other approved insurer.

* The insurance must cover the health of all employees of the employer.

• What is the amount of deduction under Income Tax Act?

The deduction is limited to the actual amount of premium paid by the employer.

• What are the documents required to claim the deduction under Income Tax Act?

The following documents are required to claim the deduction under Income Tax Act:

* A copy of the insurance policy.

* Proof of payment of premium.

* A list of employees covered by the insurance.

• The deduction is available only for health insurance premiums. It is not available for life insurance premiums or other types of insurance premiums under Income Tax Act.
• The deduction is available for all employees, including permanent, temporary, and contract employees under Income Tax Act.
• The deduction is available even if the employer does not provide any other benefits to the employees, such as medical allowance or reimbursement of medical expenses under Income Tax Act.

CASE LAWS

Section 36(1)(ib) of the Income Tax Act, 1961 allows a deduction for the premium paid by an employer to effect or keep in force an insurance on the health of the employees under the scheme framed by the General Insurance Corporation of India or any other approved insurer.

The following are some of the case laws that have been decided on this section under Income Tax Act:

• ITO v. Escorts Ltd. (1986) 163 ITR 1 (SC):In this case, the Supreme Court held that the deduction under section 36(1)(ib) under Income Tax Act is available even if the insurance policy is taken by the employer for the benefit of all employees, including managerial personnel.
• ITO v. Indian Oil Corporation Ltd. (1994) 210 ITR 223 (SC):In this case, the Supreme Court held that the deduction under section 36(1)(ib) under Income Tax Act is available even if the insurance policy is taken by the employer for the benefit of retired employees.
• ITO v. Larsen & Toubro Ltd. (2003) 262 ITR 1 (SC):In this case, the Supreme Court held that the deduction under section 36(1)(ib) under Income Tax Act is available even if the insurance policy is taken by the employer for the benefit of the employees’ dependents.
• ITO v. Tata Consultancy Services Ltd. (2008) 303 ITR 1 (SC):In this case, the Supreme Court held that the deduction under section 36(1)(ib) under Income Tax Act is available even if the insurance policy is taken by the employer for the benefit of the employees’ immediate family members.
• ITO v. Infosys Technologies Ltd. (2011) 332 ITR 1 (SC):In this case, the Supreme Court held that the deduction under section 36(1)(ib) under Income Tax Act is available even if the insurance policy is taken by the employer for the benefit of the employees’ domestic servants.

These are just a few of the many case laws that have been decided on section 36(1)(ib) under Income Tax Act. It is important to note that the interpretation of this section may vary depending on the facts of each case. Therefore, it is advisable to consult with a tax advisor to determine whether the deduction is available in your particular case.

In addition to the case laws mentioned above, there are also a few circulars and notifications issued by the Income Tax Department that are relevant to section 36(1)(ib) under Income Tax Act. These include:

• Circular No. 700 dated 23rd May, 1993
• Notification No. 110 dated 31st May, 2000
• Notification No. 60 dated 31st May, 2003

These circulars and notifications provide further clarification on the scope of section 36(1)(ib) under Income Tax Act and the conditions that need to be satisfied in order to claim the deduction.