Section 37(1) of the Income Tax Act Employer-Employee Insurance

Employee welfare is one of the prime responsibilities of an employer. It helps in the smooth functioning of the organization and also develops a productive, healthy work environment. Employer-Employee Insurance, commonly known as group health insurance is one such benefit offered by the employer to his employee. Section 37(1) of the Income Tax Act employer-employee insurance mentions the tax exemptions on the premiums paid toward this insurance plan. In the article below, we shall look in detail at these plans, eligibility, and their benefits.

Read more
Personalised health plans that fit your organizations requirements & dedicated experts to help you choose.
Customized plans

Affordable prices

24X7 Support

Dedicated claims manager

Total Care

All round wellness benefits

Fast-track your search with instant quotes from top insurers
₹1 Lakh cover starting at
₹110/employee+
No medical test required
Zero waiting period
Paperless claims
secure-icon We don't spam
Get Updates on WhatsApp
By clicking on "View Plans Instantly" you agree to our Privacy Policy and Terms Of Use and also provide us a formal mandate to represent you to the insurer and communicate to you the grant of a cover.

Whom do you want to insure?

  • Employee, spouse & kids

  • Employee only

Employer-Employee Cover Overview

Employee-employer insurance works on providing uniform health coverage to each member of the organisation. Such plans come complementary to the employee’s cost-to-company (CTC) since the company pays the premium on their behalf. In this manner, employees benefit from availing of such group medical or term insurance without bearing any cost on their salaries. Following are the types of plans covered under such agreement:

- Group medical insurance

- Group term life insurance

- Group personal accident insurance

Eligibility for Employer- Employee Insurance under the Income Tax Act

- Sole proprietors, partnership firms, MSMEs, or any private or public company, can buy employee-employer insurance.

- For group medical insurance there should be a minimum of seven employees.

- For life insurance, the minimum number of employees should be ten.

- For the employees to be covered under this policy, individuals must be of legally employable age, that is, above the age of 18 to 65 years.

- NRIs and foreign individuals working at a company in India are also eligible for this plan.

Overall benefits of Employer-Employee Insurance under the Income Tax Act

There are several benefits of an employer-employee insurance plan, they are:

- Increased productivity and morale of the workforce

- Employees gain access to quality healthcare

- Attract and retain talent

- Help lower attrition rate

Tax Benefits of Employer-Employee Insurance

Section 37(1) of the Income Tax Act mentions the tax exemptions for employer-employee insurance. Let us look at these tax benefits from the employer’s and employee’s points of view.

From the point of view of the employee:

- Employees can earn multiple benefits depending on group term life, personal accident, or group medical insurance plans.

- Employees and their families get a cover, free of cost.

- The premium for this insurance is paid by the employer; however, the employee is eligible to claim tax exemption u/s 80C.

- Complete maturity proceeding is tax exempted under section 10(10D) of the income tax act.

- Family members get financial protection in case of the unfortunate event of the death of the employee.

From the point of view of the employer:

- As per Section 37(1) of the Income Tax Act, 1961, an organization can apply tax exemption for the premiums paid towards employer-employee insurance

- This premium can be declared under business expenses, thus increasing the monetary benefits

- Such corporate-sponsored employee insurance can reduce the attrition rate

Points to Remember under Section 37(1) of the Income Tax Act - Employer Employee Insurance

The deductions or tax exemptions are allowed based on the following conditions:

- The expenditure shown should have been already covered under sections 30 to section 36 of the Act.

- The expenses must be incurred in the applicable accounting year.

- The expenses should be based on the business activity carried by the assessee. The profits of the business must be incurred after the business is set up.

- The expenses should not be personal expenses.

- Expenses are not of a capital nature.

- The expenses should be incurred exclusively for the business

Conclusion

Simply put, employer-employee insurance as per the Income Tax Act, consists of many insurance plans including group medical insurance. This is different from keyman insurance, wherein, the employer can only purchase term life cover. Comprehensive group insurance covers the employee’s and their dependent’s life, and health along with offering tax benefits and lower attrition rates to the employer.

Written By: PolicyBazaar - Updated: 23 May 2023

Wait! Didn't find what you were looking for?

Our certified business insurance experts are just a call away.

Call scheduled successfully

Thank you
Our experts will provide you assistance with your
insurance coverage. Be assured, all your questions
will be answered

Customizable plans from top insurers

starting @ ₹110/employee*

View Quotes
Group Health Insurance Articles
GIPSA stands for General Insurance Public Sector Association.It is a group of four General insurance companies...Read more
28 Apr 2022 by Policybazaar 14586 Views
A group medical insurance scheme offers many benefits in addition to providing financial support during medical...Read more
08 Feb 2023 by Policybazaar 6948 Views
When it comes to insurance, it's important to have a clear understanding of the available options. GPA (Group...Read more
01 Jun 2023 by Policybazaar 6498 Views
Adequate health insurance forms an important component in a sound and practical personal financial plan. Its...Read more
21 Sep 2022 by Policybazaar 6745 Views
Group health insurance for employees is one of the most common and favored types of benefits offered by the...Read more
25 Aug 2022 by Policybazaar 5922 Views
Nonprofit organisations are crucial in bringing about social...Read more
27 Feb 2024 by Policybazaar 12 Views
In today's fast-paced and competitive world, mental health...Read more
23 Feb 2024 by Policybazaar 36 Views
In today's fast-paced and competitive world, the importance of...Read more
22 Feb 2024 by Policybazaar 31 Views
Group health insurance for high-risk occupations (GHI) plays a...Read more
13 Feb 2024 by Policybazaar 78 Views
Providing health insurance coverage to employees is a gesture of...Read more
08 Feb 2024 by Policybazaar 82 Views
Policybazaar for Business - Group Health Insurance - Customer Reviews
View all
4.4/5
Based on 189 reviews
4.4
out of 5
Based on 189 reviews
38 users
136 users
15 users
0 users
0 users
3.8 April 09, 2023
Mansi
Excellent Support
It was easy to buy insurance from PolicyBazaar website and customer support was also amazing to clear all the doubts.Thankyou. Highly worth it.
Dehradun
4.3 April 01, 2023
Mahesh
Necessary Investment
It is a good and necessary investment. Thanks PB.
Lucknow
4.3 March 24, 2023
Surya
Provides Satisfactory Results
I purchased Group health insurance at policybazaar recently and i am so much satisfied with the plan. The application process was smooth and efficient, making the typically tedious task of getting insurance surprisingly hassle-free.Thanks PB.
Bareilly
3.8 March 16, 2023
Naveen
Helpful In Making Decisions
When it came to selcting the right Group Health Insurance, Policybazaar offered an impressive range of options from reputable insurers. I appreciated the comprehensive details avalable for each policy which helped me to take the better decisions. Thankyou.
Delhi
4.3 March 15, 2023
Rajesh
Increases Clients Expectations
I recently had the pleasure of securing a Group Health Insurance policy throug PolicyBazaar and I must say the Entire process exceeded my expectations! From start to finish, their service werw great. Thankyou.
Delhi
3.8 March 02, 2023
Ravi
Great Experience
I got great deals on PolicyBazaar website. Highly recommend.
Pune
4.3 February 17, 2023
Diljeet
Excellent Purchase
It was a excellent purchase at PolicyBazaaar. Thankyou team.
Coimbatore
4.3 February 04, 2023
Satya
Prompt Services
Policybazaar's efficient claims process was impressive. In case of any medical emergencies, my employees were able to get their claims settled swiftly, allowing them to focus on their health and recovery without worrying about financial aspects.Thankyou
Chennai
4.3 January 22, 2023
Abhishek
Budget Friendly Purchase
Thankyou PolicyBazaar for providing such a great plan at affordable premium rates. It was a budget-freindly purchase.
Delhi
4.3 January 09, 2023
Abhash
Multiple Range Of Benefits
I purchased Group health Insurance which offered me plans with affordable rates Thankyou PB.
Pune