Any sum payable by the employer, whether directly or through a fund other than a recognised provident fund or an approved superannuation fund or Deposit Linked Insurance Fund to effect an assurance on the life of the assessee or to effect a contract for an annuity is a perquisite taxable in the hands of all employees. Here, the actual expenditure incurred by the employer is the value of the perquisite.

But, where the employer pays insurance premium under certain schemes such as Employees’ State Insurance Schemes, Fidelity Guarantee Scheme, it shall not be regarded as a perquisite for the employees as these schemes are generally for the benefit of the employer.

Life Insurance Premium (LIP) paid by the employer on the life of the employee is a perquisite in the hands of the employee. Hence, it is included in the employee’s gross salary. Since the payment of LIP was on behalf of the employee and the same has been included in the total income of the employee, such employee shall be entitled to a deduction under section 80C.

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