# Can I claim Business Insurance Premiums as a business expense in India?

**Yes, fully claimable.** 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. The GST credit on it depends on whether the cover is obligatory under law, and individual health and life insurance has been exempt from GST since 22 September 2025.

Typical amount: INR 30,000 to INR 3 lakh per year for typical SME insurance portfolio

## 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:** Input tax credit on health and life insurance is blocked under Section 17(5) of the CGST Act unless the employer is obliged by law to provide the cover, so check each policy before claiming the credit on group health 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.

**Important:** Which Act applies depends on the year. Income earned up to 31 March 2026 (FY2025-26, assessed in AY2026-27) is governed by the Income Tax Act, 1961. From 1 April 2026 the Income-tax Act, 2025 applies for tax year 2026-27, and its section numbers differ from the 1961 Act cited here. The TDS sections 192 to 194T are consolidated into sections 392 and 393, and the TDS rates and thresholds were retained. GST on business insurance such as fire, marine and professional indemnity stays at 18%, and a GST-registered business can claim the input tax credit on those.

Source: https://www.incometax.gov.in/iec/foportal/help/individual/return-applicable-1

## Related expenses

- [Employee Salaries and Wages](https://accounts-os.com/in/expenses/employee-salaries-in)
- [Office Rent](https://accounts-os.com/in/expenses/office-rent-in)
- [Business Travel Expenses](https://accounts-os.com/in/expenses/travel-business-in)