Can I Claim Business Insurance Premiums as a Business Expense in India?
Yes — insurance premiums for business policies (fire, theft, public liability, professional indemnity, keyman insurance) are deductible under Section 37(1). Premiums for policies solely covering the life or health of directors for personal benefit are not deductible as business expenses. Group health insurance for employees is deductible and also qualifies for GST input tax credit (18% GST on insurance services is creditable for B2B policies).
What Income Tax Department (CBDT) says
Section 37(1) IT Act: premiums for insurance on business assets and liabilities are deductible. Group health insurance for employees: deductible under Section 37(1) and not a taxable perquisite (exempt under Section 17(2)(v) if hospitalisation-only). Keyman insurance: premium is deductible but proceeds are fully taxable as business income.
When you can claim
- Fire and burglary insurance on business premises and assets
- Marine cargo insurance on goods in transit
- Professional indemnity and errors and omissions insurance
- Director and officers (D&O) liability insurance
- Group health insurance for all employees (medical hospitalisation policies)
- Keyman insurance on key management personnel
When you cannot claim
- Life insurance on directors for personal benefit (not business-purpose)
- Premium for personal health/life policies of promoters
- Motor insurance on vehicles used exclusively for personal purposes
Good to know
Pro tip: Group health insurance for employees qualifies for input tax credit on the 18% GST — this is explicitly allowed under Section 17(5) of the CGST Act (exclusion applies only to personal/recreational insurance). Keyman insurance is a popular tax planning tool: premiums are deductible, but remember that any maturity proceeds or death benefits are fully taxable as business income. Ensure the keyman policy is taken in the company's name, not the director's name.
Related expenses
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