Chapter IV - Computation of Total Income
Section 30
Section 30: deduction on certain premium
Section 30 allows three specific categories of insurance premium to be deducted while computing business income - insurance on stock/stores, cattle insurance paid by federal milk co-operative societies, and employee health insurance premium paid by an employer through a non-cash mode under an approved scheme.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
The following sums shall be allowed as deduction in computing income chargeable under section 26, being premium paid:—
(a) by any assessee in respect of insurance against risk of damage or destruction of stocks or stores used for the purposes of business or profession;
(b) by a federal milk co-operative society to effect or to keep in force an insurance on the life of the cattle owned by a member of a co-operative society, being a primary society engaged in supplying milk raised by its members to such federal milk co-operative society;
(c) 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 under a scheme framed in this behalf by— (i) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government; or (ii) 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 (41 of 1999).
Introduction
This is a closed list of particular insurance premiums deductible in computing business income. The insured subject and, for employee health cover, the approved scheme and non-cash payment are central to eligibility.
Key takeaways
Insurance on business stock
A premium to insure stocks or stores used for business or profession against damage or destruction is an allowable business deduction.
Two other specified premiums
The section also covers qualifying cattle-life insurance by a federal milk co-operative and employee health insurance paid by an employer by a non-cash mode under an approved scheme.
What premiums are deductible
The following premiums are deductible in computing income chargeable under section 26:
- Premium paid by any assessee for insurance against risk of damage or destruction of stocks or stores used for the business or profession
- Premium paid by a federal milk co-operative society to insure the life of cattle owned by a member of a primary co-operative society that supplies milk raised by its members to the federal society
- Premium paid by an employer, through any mode other than cash, to insure the health of its employees under a scheme framed by the General Insurance Corporation of India (and approved by the Central Government) or by any other insurer approved by the Insurance Regulatory and Development Authority
Match the policy to a statutory category
A business stock or stores policy must cover risk of damage or destruction and relate to items used for the business or profession.
The cattle-life policy route is specific to a federal milk co-operative and cattle owned by a member of a qualifying primary milk society.
Employee health cover conditions
The employer health-premium route requires payment other than cash and a scheme approved through the statutory insurer and regulator route.
Keep the policy, approval and bank payment evidence with the employer's business-income computation.
Step-by-step flow for applying Section 30
- 1
Is the premium for insurance of stocks or stores used for the business or profession?
- Yes: Deductible under clause (a).
- No: Go to the next step.
- 2
Is it paid by a federal milk co-operative society on the lives of cattle of members of a primary milk society?
- Yes: Deductible under clause (b).
- No: Go to the next step.
- 3
Is it employee health insurance paid by the employer under a GIC scheme approved by the Central Government or an IRDAI-approved insurer scheme?
- No: Not deductible under Section 30.
- Yes: Go to the next step.
- 4
Was the premium paid by a mode other than cash?
- Yes: Deductible under clause (c).
- No (cash): Not deductible under clause (c).
Practical checklist
Do
- Classify the policy as stock/stores, qualifying co-operative cattle or employee health cover before claiming.
- Retain policy schedule, premium receipt and proof of scheme approval where the clause requires it.
Avoid
- Do not assume every business insurance premium falls within Section 30.
- Do not claim the employee health-premium route for a cash payment.
Illustrative example
Worked example: a trader's insurance premiums
Hypothetical facts (illustration only, not a real taxpayer): A trading firm pays ₹45,000 premium to insure its warehouse stock, ₹1,20,000 by bank transfer for a group health policy for its employees under an IRDAI-approved insurer's scheme, and ₹10,000 in cash for a health policy for one more employee.
Stock insurance
₹45,000 is deductible under clause (a).
Group health by bank transfer
₹1,20,000 is deductible under clause (c)(ii).
Health premium in cash
₹10,000 fails the non-cash condition in clause (c), so it is not deductible under this section.
Total
₹45,000 + ₹1,20,000 = ₹1,65,000.
Outcome
- Deduction under Section 30 is ₹1,65,000.
- Pay employee health premiums through a non-cash mode to keep them deductible.
Glossary
- Federal milk co-operative society
- The specific co-operative claimant described in clause (b), receiving milk from member primary societies.
- Approved health scheme
- An employee health insurance scheme meeting clause (c)'s insurer and approval conditions.
Frequently asked questions
Can I deduct insurance premium on my business inventory?
Yes - premium paid for insurance against risk of damage or destruction of stocks or stores used in the business or profession is deductible under Section 30(a).
Is employee health insurance premium deductible if paid in cash?
No - Section 30(c) specifically requires the premium to be paid through a mode other than cash for it to be deductible.
Need help applying this provision to your situation?
Talk to our tax team about this sectionLast updated 9 October 2026