Deduction on certain premium
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
The following sums shall be allowed as deduction in computing income chargeable under section 26, being premium paid:––
- (a) by any assessee in respect of insurance against risk of damage or destruction of stocks or stores used for the purposes of business or profession;
- (b) by a federal milk co-operative society to effect or to keep in force an insurance on the life of the cattle owned by a member of a co-operative society, being a primary society engaged in supplying milk raised by its members to such federal milk co-operative society;
- (c) by the assessee, as an employer, through any mode of payment other than cash, to effect or to keep in force an insurance on the health of its employees under a scheme framed in this behalf by—
- (i) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 and approved by the Central Government; or
- (ii) any other insurer and approved by the Insurance Regulatory and Development Authority established under section 3(1) of the Insurance Regulatory and Development Authority Act, 1999.
FAQs on Section 30 of the Income-tax Act 2025
1. What is the purpose of Section 30?
Section 30 allows deduction of specific insurance premiums paid in connection with business or professional activities.
2. Is this deduction linked to business income?
Yes, it applies to income chargeable under Section 26, i.e., “Profits and gains of business or profession.”
3. Can I claim insurance premium for stocks and stores?
Yes, if the premium is paid to insure stock or stores against risk of damage or destruction, and they are used for business or profession.
4. What is the deduction allowed for milk co-operatives?
A federal milk co-operative society can claim deduction for premium paid to insure the cattle owned by members of a primary milk society that supplies milk to it.
5. Can primary milk societies claim this deduction?
No, the deduction is specifically allowed only to federal milk co-operative societies, not primary ones.
6. Can employers claim deduction for employee health insurance?
Yes, if the insurance is:
- For the health of employees,
- Paid through any mode other than cash,
- Under an approved scheme by GIC or IRDAI-registered insurers.
7. Is cash payment allowed for claiming this deduction?
No. Premium must be paid through non-cash modes like cheque, bank transfer, etc.
8. What qualifies as an “approved scheme”?
Schemes framed by:
- General Insurance Corporation of India (GIC) and approved by the Central Government, or
- Any IRDAI-approved insurer.
9. Is there a limit to the deduction amount?
Section 30 does not specify a monetary limit. However, general rules of reasonableness and business purpose apply.
10. Can an individual (not an employer or milk co-op) claim deductions under this section?
Only business-related premiums for stock/stores are deductible by any assessee. The other two clauses apply only to specific entities.
Section 30 encourages risk mitigation in business and employee welfare by allowing deductions for specific insurance premiums. It supports inventory protection, agricultural livelihoods, and employee health, provided certain regulatory and procedural conditions are met.
