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CS Executive · Tax Laws and Practice · Income under the Head Salary

Under section 18 of the Income-tax Act, 2025, which statement about payments from a provident or other fund and keyman insurance is correct?

A payment from a provident or other fund is included in profits in lieu of salary only to the extent it does not consist of the assessee's own contributions or interest on them. Section 18(1)(c)(ii) provides this, while keyman insurance sums with bonus are separately included.

  1. AA payment from a provident or other fund is within profits in lieu of salary only to the extent it does not consist of the assessee's contributions or interest thereonCorrect
  2. BA payment from a provident or other fund is fully included, including the employee's own contributions
  3. CKeyman insurance sums, including bonus allocated, are never covered by section 18
  4. DPayments from an employer are excluded from section 18(1)(c) in all cases

Explanation

Section 18(1)(c)(ii) includes a payment from a provident or other fund only to the extent it does not consist of the assessee's contributions or interest on them. Keyman insurance sums, including bonus, are included by clause (iii), and payments from an employer are included by clause (i), subject to the listed exclusions.

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