In my view, FBT is not applicable on keyman insurance premium.Section 115WB(3) of the I T Act defines fringe benefits. It excludes the perquisites in respect of which tax is paid or payable by the Employee. Section 115WB(3) is given below:

• “(3) For the purposes of sub-section (1), the privilege, service, facility or amenity does not include perquisites in respect of which tax is paid or payable by the employee 25c or any benefit or amenity in the nature of free or subsidised transport or any such allowance provided by the employer to his employees for journeys by the employees from their residence to the place of work or such place of work to the place of residence.”

Under section 17(2) (v) life insurance premium or any sum paid by the employer ,whether directly or through a Fund to effect a contract for annuity are perquisites taxable in the hands employees.

Keyman insurance policy is explained under section 10(10D) of the I T Act.According to explanation under the said section , the Keyman insurance policy means:

• ” a life insurance policy taken by a person on the life of another person who is or was the employee of the first-mentioned person or is or was connected in any manner whatsoever with the business of the first-mentioned person;”

Therefore, the premium paid by the Employer is taxable as perquisite u/s 17(2) shall not fall within the definition of Fringe benefits as defined under section 115WB (3) of the I T Act, hence no FBT is to be paid by the company on said premium paid by the employer.