Page 97 - IC23 life insurance application

2. Any other gratuity received by an employee on retirement or on his becoming

incapacitated prior to such retirement or on termination of his employment or any

gratuity received by his widow, children or dependants on his death to the extent

it does not in either case exceed one half month salary for each year or service

subject to a maximum of Rs.3,50,000/-.

GROUP INSURANCE SCHEME

The Central Board of Direct Taxes has given the following tax concessions to

promote employee welfare schemes under group term insurance.

THE EMPLOYER

The premiums paid by an employer will be allowed as expense in his income tax

assessment in the year of payment.

THE EMPLOYEE

1) The employer's premiums will not be treated as perquisite in the hands of the

employees and

2) The benefits if and when paid will not be taxed in the hands of the dependants

and since, they are paid by the LIC the employer will not claim any tax relief on the

death benefits. The concessions are subject to the modification that if the company

received payment by way of surrender value or return of premium, they will be taxed

in the employers hand.

Copyright Dr Rakesh Agarwal Sashi Publications Private Limited

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