EMPLOYER EMPLOYEE

SCHEME
IN A DIFFERENT PERSPECTIVE

INTRODUCTION.........

BASICALLY IT IS A EMPLOYEE WEFARE SCHEME

ANY EMPLOYER WHETHER IT IS A INDIVIDUAL,
PARTNERSHIP FIRM, PVT.LIMITED, LIMITED CO.S OR
TRUST CAN INSURE THEIR EMPLOYEES UNDER THE
SCHEME
EVEN LOSS MAKING CO.S CAN ALSO TAKE
ADVANTAGE OF THE SCHEME
ANY INSURANCE PLAN CAN BE GIVEN UNDER THE
SCHEME
EMPLOYEE SHOULD NOT HAVE MORE THAN 50%
SHARE HOLDING INDIVIDUALLY AND 70% IN FAMILY

INTRODUCTION.........

DIRECTORS OF THE PVT.LTD. COS AND LTD CO.S

ARE ALSO ENTITLED FOR THE SCHEME
THERE IS NO ANY MINIMUM NO.S REQUIRED
UNDER THE SCHEME
EMPLOYER IS ENTITLED TO GET EXEMPTIONS FOR
PREM. AMT WHETHER IT IS UNDER SINGLE OR NON
SINGLE MODE U/S 37(1) AS BUS.EXPENSES
AS IT IS A EMPOYEE WALEFARE PLAN EMPLOYEE IS
THE BENEFICIARY OF THE POLICY
NOMINATION IS TO BE MADE BY EMPLOYEE
EMPLOYER CAN PUT CERTAIN CONDITIONS IN THE
POLICY

TAX IMPLICATIONS.....
THERE ARE TWO PARTIES INVOLVED IN THE TRANSACTION
ONE IS EMPLOYEE ANOTHER IS EMPLOYER

EXAMPLE

PREM AMT IS RS. 1,00,00,000

EMPLOYER

EMPLOYEE

(-) 1,00,00,000 AS BUSINESS

(+) 1,00,00,000 AS PERQS
EXPENSES U/S 37(1)
U/S 17 (2) V
I.TAX @ 30%
EMPLOYER CAN PAY I.TAX ON BEHALF OF THE EMPLOYEE
U/S 192 (1A) ON PERQS. U/S 17 (2)
HENCE THE TAX LIABILITY SHIFTED TO EMPLOYER

(-)30,00,000

-------------------- RS. 30,OO,OOO

NOW TAX ON TAX ALSO WILL BE PAYABLE BY EMPLOYER

9,00,OOO AND THIS AMT CAN NOT BE CLAIMED U/S 37(1)

BUT WHY SHOULD EMPLYER DO IT?

EXAMPLE:
IF WE DONT TAKE THE POLICY UNDER THE SCEME
PROFIT OF THE COMPANY WOULD HAVE INCREASED BY

RS. 1,30,00,000
I. TAX WOULD HAVE BEEN

RS.

39,00,000

NET PROFIT WOULD HAVE BEEN INCRESED BY

RS. 91,00,000
AND IF THE COMPANY DECLARES THIS AMT AS DIVIDEND
AGAIN DIVIDEND DISTRIBTION TAX @16.6% RS.15,10,600

TOTAL TAX LIABILITY OF CO. WILL BE

(3900000+1510600)= 5410600
WHILE WE HAVE PAID ONLY 900000

NET SAVING IS

4510600

THANK YOU