Schedule XIV — INSURANCE BUSINESS

[See section 55]
INSURANCE BUSINESS
A.—Life insurance business
Profits of life insurance business to be computed separately.
1. If a person is engaged in life insurance business during the tax year, the profits
and gains of such business shall be computed separately from profits and gains of
any other business.
Computation of profits of life insurance business.
2. (1) The profits and gains life insurance business shall be the annual average of
the surplus after adjusting the surplus or deficit disclosed by the actuarial valuation
made as per the Insurance Act, 1938 (4 of 1938) for the last inter-valuation period
ending before the commencement of tax year, so as to exclude from it any surplus
or deficit from any earlier inter-valuation period.
(2) Any expenditure which is inadmissible under section 34 in computing the profits
and gains of a business, shall be added to such profits and gains of life insurance
business.
Adjustment of tax paid by deduction at source.
3. When an assessment of the life insurance business profits is made based on the
annual average of a surplus disclosed by a valuation for an inter-valuation period
exceeding twelve months, then, in computing the income-tax, payable for that year
credit shall––
( a) not be given as per section 390 for the income-tax paid in the preceding
tax year;
( b) be given for the annual average of the income-tax paid by deduction at
source from interest on securities or otherwise during such period.
B.—Other insurance business
Computation of profits and gains of other insurance business.
4. (1) The profits and gains of any insurance business other than life insurance shall
be the profit before tax and appropriations as disclosed in the profit and loss account
prepared as per the Insurance Act, 1938 (4 of 1938) or the rules made thereunder
or the Insurance Regulatory and Development Authority Act, 1999 (4 of 1999) or
the regulations made subject to the following adjustments:––
( a) subject to the other provision of 51[this paragraph ], any expenditure
or allowance including any amount debited to profit and loss account
either by way of a provision for any tax, dividend, reserve, or any other
provision as may be prescribed, which is inadmissible under sections 28
to 54 shall be added back;
( b) any gain or loss from realisation of investments shall be added or de -
ducted, as the case may be, if not already credited or debited to the profit
and loss account;
( c) any provision for diminution in investment value debited to the profit
and loss account, shall be added back; and
( d) such amount carried over to a reserve for unexpired risks as may be
prescribed shall be allowed as a deduction.
(2) The amount payable under section 37, which is added under sub-paragraph (1)
(a) shall be allowed as deduction in the tax year in which it is actually paid.
51. Substituted for “this rule” by the Finance Act, 2026, w.e.f. 1-4-2026.
52[(3) The amount not deductible under sub-clause (i) or (ii) of section 35(b), which is
added under sub-paragraph (1)(a), shall be allowed subsequently as a deduction in a
tax year in accordance with the provisions of the said sub-clause, as the case may be.]
C.—Other provisions
Profits and gains of non-resident person.
5. (1) The profits and gains of a person non-resident in India who is engaged in
the insurance business through its branches in India may, in the absence of more
reliable data, be deemed to be that proportion of his global income which corre -
sponds to the proportion which his premium income derived from India bears to
his total premium income.
(2) In this paragraph, the global income in relation to life insurance business of a
person not resident in India shall be computed as per this Act for computing the
profits and gains of life Insurance business carried on in India.
Interpretation.
6. (1) For the purposes of this schedule,––
( a) “investments” include securities, stocks and shares;
( b) “life insurance business” means life insurance business as defined in
section 2(11) of the Insurance Act, 1938 (4 of 1938).
(2) References to the Insurance Act, 1938 (4 of 1938) in this Schedule regarding
the Life Insurance Corporation of India shall be treated as references to that Act or
section 43 of the Life Insurance Corporation Act, 1956 (31 of 1956).