No need to TDS deduct on medical cash benefit to LIC staff

ITAT grant Relief Order: No TDS Required to be deducted on medical Cash Benefit to LIC employees

• In a significant ruling granting relief to the LIC Act granting advantages to the LIC Held by ITAT the Bangalore bench.
• LIC doesn’t need to deduct TDS on cash payment of cash medical benefit to its employees.
• This kind of benefit payment is beyond the preview of section 192 of the Income Tax Act, 1961.
• According to the Two-member bench of ITAT  the Income-tax Act did not require to deduct the Tax deduction sources in the case of a cash medical benefit and thus allowed the life Insurance Corporation of India to appeal.

Previously, the Assessee Officer income tax found that benefits u/s 192 has been taken,  the taxpayer has not to deduct the TDS in regards to cash medical benefits given to employees via payment to Chinnu Graphics, payment has been made by the company to Kulkarni Facilities, so payments made to Sodexo SVC India Pvt.Ltd that TDS return filed in the case of HP India Sales Pvt.Ltd, & EMDC Projects.

• Exemptions benefit U/s 10 of the cash medical benefit is given to employees was deemed to be privileged concerning in terms of cash medical benefits.
• The money earned as a fixed allowance is to be is fully taxable in the employee’s hands as a considered as benefit.
• The Assessee Officer needed to ensure that the amount given as medical benefits comes under the definition provided under section 17(2)(iv) of the Proviso(v) of the income tax Act.
• Under Section 192(1) of the income tax Act, provide obligation on the part of the person responsible for paying income chargeable under the head “salaries” to deduct TDS, at the time of making the payment.
• Section 192 of the income tax Act mentioned that the individual subject to the payment of income taxable under the head of the salary would be eligible to deduct TDS within the payment period on the measured value.
• That cash payment of cash medical benifit is entitled to be charged under tax under the head salary, which is put down under sections 15 to 17 of the income tax Act 1961.
• “The Finance Act 2015 of income tax act 1961 has been introduced into via New section 192(2D), this Rule 26 does not clarify  need to deduct TDS in the case of any kind of Cash Medical Benefit,”
• In this circumstance, the assessee’s opinion that Cash Medical Benefit was the reimbursement of the only expenditure incurred by employees and as such they cannot form part of their income of employees.
• After Considering all the arguments from both parties, the ITAT Bangalore bench also noted that the payments in question for which the assessee has been treated as, “assessee in default” for non-deduction of TDS was not in the nature of income within the meaning of Salary as per Section 17(v) of the income tax Act.
• therefore there was no obligation on the part of the assessee to TDS.

The opinion of the assessee on that issue was also bona fide. Since the estimation made by the assessee was kept to be honest and bonafide the assessee cannot be regarded as “assessee in default,”

So it can be say that Medical Cash Benefit to LIC Employees Need not attract TDS

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