Under the Income Tax Act , any sum payable by the employer â whether directly or through a fund other than a recognized provident fund, an approved superannuation fund or deposit-linked insurance fund to assure the life of the employee or to effect a contract for an annuity â is a perquisite taxable in the hands of the employee . Thus , plain and simple reading of the provision clearly provides that if the employer pays for premium of insurance policy taken in name of employees , it should be treated as perquisite in the hand of employees. But , the issue is not as simple as it looks . The fact involved in buying the insurance cover for employees for which premium is paid by the employer is something the real factor that can decide if the premium payment is perquisite . For example ,Â in some companies ( the employer) deduct some amount from employees salary and buys insurance policy for them. Then , in some cases, insurance buying may be Â as part of salary package . In another case, the employer is protecting its business and obligation to pay on accidental death of the employees. In all such different facts , the decision about taxability of the premium payment may not be same.