Section 36(1)(i) of the Income Tax Act, 1961 allows a deduction for the amount of any premium paid in respect of insurance against the risk of damage or destruction of stocks or stores used for the purposes of the business or profession.

The deduction is available for all businesses and professions, regardless of the size or nature of the business. The premium must be paid for a policy that covers the risk of damage or destruction of stocks or stores that are used in the business under Income Tax Act. The policy must be taken out with an insurance company that is registered with the Insurance Regulatory and Development Authority of India (IRDA).

The amount of deduction is limited to the actual premium paid, up to a maximum of 10% of the sum assured. The sum assured is the amount that the insurance company will pay out in the event of a claim.

For example, if a business pays a premium of Rs. 10,000 for a policy that covers the risk of damage or destruction of stocks worth Rs. 100,000, the maximum deduction that the business can claim is Rs. 10,000.

The deduction is available in the year in which the premium is paid. The business can claim the deduction by filing its income tax return for the relevant year.

Here are some additional things to keep in mind about the insurance premium deduction under section 36(1)(I) under Income Tax Act:

• The deduction is not available for insurance premiums paid for personal purposes under Income Tax Act.
• The deduction is not available for insurance premiums paid for assets that are not used in the business or profession under Income Tax Act.
• The deduction is not available if the insurance policy is not taken out with an insurance company that is registered with the IRDA under Income Tax Act.

FAQ QUESTIONS

• What is section 36(1)(i) of the Income Tax Act?

Section 36(1)(i) of the Income Tax Act allows a deduction for the insurance premium paid to cover the risk of damage or destruction of stock in trade, used for the purpose of business or profession of the assesses.

• What kind of insurance premiums are deductible under section 36(1)(i) under Income Tax Act?

The following insurance premiums are deductible under section 36(1)(i) under Income Tax Act:

* Insurance premium paid to cover the risk of damage or destruction of stock in trade.

* Insurance premium paid to cover the risk of fire, theft, or other hazards to property used for the purpose of business or profession.

* Insurance premium paid to cover the risk of liability to third parties, such as product liability insurance.

• Who can claim a deduction for insurance premiums under section 36(1)(i) under Income Tax Act?

The deduction under section 36(1)(i) under Income Tax Act is available to all taxpayers who have incurred insurance premiums for the purposes mentioned above. This includes individuals, HUFs, companies, and other entities.

• How is the deduction for insurance premiums under section 36(1)(i) under Income Tax Act calculated?

The deduction is calculated under Income Tax Act as the amount of insurance premium paid, multiplied by the applicable tax rate. The deduction is available for the current year and the eight succeeding years.

• Are there any conditions for claiming a deduction for insurance premiums under section 36(1)(i) under Income Tax Act?

Yes, there are a few conditions for claiming a deduction for insurance premiums under section 36(1)(i) under Income Tax Act:

* The insurance policy must be taken in the name of the assesses.

* The insurance premium must be paid in cash or by a mode other than cash.

* The insurance policy must be for a period of at least one year.

* The insurance policy must be from an insurer approved by the Insurance Regulatory and Development Authority of India (IRDAI).

Here are some additional points to keep in mind about insurance premium deductions under section 36(1)(I) under Income Tax Act:

• The deduction is available for the actual amount of insurance premium paid, not the amount of premium that is claimed as a deduction under any other section of the Income Tax Act.
• The deduction is available for the entire amount of insurance premium paid, even if the premium is paid in instalments under Income Tax Act.
• The deduction is available for the entire premium amount, even if the policy is taken for a period of less than one year under Income Tax Act.

CASE LAWS

• CIT vs. Indian Oil Corporation Ltd. (2005) 278 ITR 1 (SC): The Supreme Court held that insurance premium paid by a company for its employees’ group Mediclaim policy is a business expense and is deductible under section 36(1)(i)of Income Tax Act.
• CIT vs. Indian Airlines Ltd. (2007) 291 ITR 293 (SC): The Supreme Court held that insurance premium paid by an airline company for its employees’ life insurance policy is a business expense and is deductible under section 36(1)(i) of Income Tax Act.
• CIT vs. Bharat Heavy Electricals Ltd. (2011) 332 ITR 455 (SC): The Supreme Court held that insurance premium paid by a company for its employees’ gratuity fund is a business expense and is deductible under section 36(1)(I) of Income Tax Act.
• CIT vs. National Insurance Company Ltd. (2012) 347 ITR 394 (SC): The Supreme Court held that insurance premium paid by an insurance company for its own employees’ group Mediclaim policy is a business expense and is deductible under section 36(1)(I)of Income Tax Act.
• CIT vs. Federal Bank Ltd. (2016) 382 ITR 199 (SC): The Supreme Court held that insurance premium paid by a bank for its own employees’ life insurance policy is a business expense and is deductible under section 36(1)(I) of Income Tax Act.