The section lists three premiums that are allowed as a deduction in computing income chargeable under section 26. Clause (a) allows premium paid by any assessee for insurance against the risk of damage or destruction of stocks or stores used for the purposes of the business or profession. Clause (b) allows premium paid by a federal milk co-operative society to effect or keep in force insurance on the life of cattle owned by a member of a primary co-operative society that supplies milk raised by its members to that federal society. Clause (c) allows premium paid by the assessee as an employer, through any mode of payment other than cash, to effect or keep in force insurance on the health of its employees under a scheme framed by 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 by 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.
Why it is there
Each of the three premiums protects an asset or a person connected with the earning of business income rather than the proprietor personally, so the section puts their deductibility beyond argument. The cash bar in clause (c) and the approval requirements in its two sub-clauses are the price of that certainty: the deduction is allowed for a traceable payment under a regulated scheme, not for any arrangement described as employee health cover.
Who it applies to
Any assessee carrying on a business or profession who insures stocks or stores
A federal milk co-operative society insuring cattle owned by a member of a primary milk-supplying society
An employer paying premium on health insurance for its employees
An insurer whose scheme must be approved by the Central Government or by the Insurance Regulatory and Development Authority
What this means in practice
Clause (a) is about stocks or stores, not about the premises, plant or machinery, and not about loss of profits — the risk insured must be damage or destruction of stock or stores used for the business or profession. Clause (c) carries two independent conditions, and failing either kills the deduction: payment must be through a mode other than cash, and the scheme must be one framed by the General Insurance Corporation of India and approved by the Central Government, or framed by another insurer and approved by the Insurance Regulatory and Development Authority. Clause (b) is narrow by design — it is available to the federal milk co-operative society paying the premium, on cattle owned by a member of the primary society, not to the primary society or the member.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
A company pays premium on a policy covering its warehouse stock against fire, and pays by bank transfer the premium on group health cover for its employees under an irdai-approved insurer's scheme. Both are deductible in computing its income under section 26 — the first under clause (a), the second under clause (c)(ii). Had the same health premium been handed over in cash, clause (c) would have denied it in full, however genuine the payment and however clearly it was for employees.
Where you meet this section
In a scrutiny proceeding where a claimed premium is proposed to be disallowed in computing business income. The health insurance premium under clause (c) is the usual one questioned, on the mode of payment or on whether the scheme carries the required approval.
The words themselves
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
Section 30(c), Income-tax Act, 2025.
in respect of insurance against risk of damage or destruction of stocks or stores used for the purposes of business or profession
Section 30(a), Income-tax Act, 2025.
What people get wrong
Paying an employee health insurance premium in cash. Clause (c) allows the deduction only where payment is through any mode of payment other than cash.
Assuming any health insurance scheme qualifies. Clause (c) requires a scheme framed by the General Insurance Corporation of India and approved by the Central Government, or framed by any other insurer and approved by the Insurance Regulatory and Development Authority.
Reading clause (a) as covering business premises, plant or machinery. It covers insurance against risk of damage or destruction of stocks or stores.
Claiming cattle insurance premium under clause (b) at the level of the primary society or the member. The clause allows it to the federal milk co-operative society that pays the premium, on cattle owned by a member of the primary society supplying milk to it.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.
Circular No. 14/2023 — Standard operating procedure SOP for making application for recomputation of total income of a co operative society engaged in the 2023-07-27
Circular No. 18/2021 — Clarification regarding section 36 1 xvii of the income tax act 1961 inserted vide finance act 2015 2021-10-25
Circular No. 3/2008 — Explanatory Notes to the Provisions of the Finance Act, 2007 2008-03-12
Circular No. 601 — 865. Prima facie adjustments under section 143(1)(a) in respect of disallowance under section 43B and nature of evidence to be enc 1991-06-04
Circular No. 414 — 308. Bonus - Whether deduction under clause (ii), first proviso, is admissible if it is within the minimum 8.33 per cent of salary 1985-03-14
Circular No. 403 — 315. Contribution to approved superannuation fund - Whether pension benefits can be provided to employees under rule 89 of Income- 1984-12-05
Circular No. 287 — 307. Bonus - Whether it would be permissible for employers to claim deduction of bonus paid in excess of amount worked out as per 1980-12-04
Circular No. 162 — 1290. Denial of income-tax clearance certificate to contractors on levy of penalty for concealment and/or conviction - Guidelines 1975-03-24
Circular No. 146 — Provision for estimated service gratuity payable to its employees -Deduction under section 37(1) and section 40A(7) after its inse 1974-09-26
Circular No. 14 — 316. Contribution to approved gratuity fund - Points connected with tax relief in respect of initial contribution under clause (v) 1969-04-23
A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance.
Notification No. 9 — A notification under section 36 of the Income-tax Act, 1961 1993-11-23
Notification No. 726E — For the purposes of the said clause in respect of the assessment year commencing on and from the 1st day of April approved under s 1984-09-19
Notification No. 3433 — Following conditions for the deduction of contributions specified under section 36 1965-10-21
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 30. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
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Checkmate Services P Ltd v CITSupreme CourtHelps departmenttagged s.36(1)(va) You deposited employees' pf late but before filing the return. Is the deduction saved?
Hero Cycles (P) Ltd v CITSupreme CourtHelps taxpayertagged s.36(1)(iii) The AO says my borrowings funded advances to a sister concern and my directors. Can he disallow the interest?
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CIT v Reliance Utilities and Power LtdHigh CourtHelps taxpayertagged s.36(1)(iii) I have my own funds and borrowings. Can the AO assume the interest-free advance came out of the loan?
ChrysCapital Investment Advisors v DCITHigh CourtCuts both waystagged s.36(1)(ii) The TPO kept a comparable with an abnormal profit margin. Can I get it excluded just for that?
PCIT v KRBL Infrastructure LtdHigh CourtHelps taxpayertagged s.36(1)(iii) The officer accepts my lender exists but says the lender's own purchases were bogus. Do I have to explain where the lender got the money?
Raj Kumar Bothra v DCITHigh CourtHelps taxpayertagged s.36(1)(va) CPC disallowed my late-deposited pf and esi under 143(1)(a). Was a summary adjustment even open to them?
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Samsung C and T Corporation India P Ltd v DCITITATHelps taxpayertagged s.36(1)(va) CPC issued the section 143(1)(a) notice and passed the intimation a week later, and the portal shows a response I never filed. Is that intimation…
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.