THE FIRST SCHEDULE
INSURANCE BUSINESS
[See section 44]
A.—Life
insurance business
Profits of life insurance
business to be computed separately.
1. In
the case of a person who carries on or at any time in the previous year carried
on life insurance business, the profits and gains of such person from that
business shall be computed separately from his profits and gains from any other
business.
16[R1] Computation of profits of life insurance
business.
2. The
profits and gains of life insurance business shall be taken to be the annual
average of the surplus arrived at by adjusting the surplus or deficit disclosed
by the actuarial valuation made in accordance with the Insurance Act, 1938 (4
of 1938), in respect of the last inter-valuation period ending before the
commencement of the assessment year, so as to exclude from it any surplus or
deficit included therein which was made in any earlier inter-valuation period.]
Deductions.
3. [Omitted by the Finance Act, 1976, w.e.f.
1-4-1977. Earlier, the rule was first amended by the Finance Act, 1966, w.e.f.
1-4-1966 and by the Finance Act, 1965, w.e.f. 1-4-1965.]
Adjustment of tax paid by
deduction at source.
4. Where
for any year an assessment of the profits of life insurance business is made in
accordance with 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 not be given in accordance with section
199 for the income-tax paid in the
previous year, but credit shall 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.
5. The
profits and gains of any business of insurance other than life insurance shall
be taken to be the balance of the profits disclosed by the annual accounts,
copies of which are required under the Insurance Act, 1938 (4 of 1938), to be
furnished to the Controller of Insurance, subject to the following
adjustments:—
(a) subject to the
other provisions of this rule, any expenditure or allowance 17[R2] [including any amount debited to the 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 not admissible under the
provisions of sections 30 to 18[R3] [43B] in computing the profits and gains of a
business shall be added back;
20[R5] (c) such amount carried over to a
reserve for unexpired risks as may be prescribed in this behalf shall be
allowed as a deduction.
C.—Other
provisions
Profits and gains of
non-resident person.
6.
(1) The profits and gains
of the branches in India of a person not resident in India and carrying on any
business of insurance, may, in the absence of more reliable data, be deemed to
be that proportion of the world income of such person which corresponds to the
proportion which his premium income derived from India bears to his total
premium income.
(2) For the purposes of this rule, the world income in relation to
life insurance business of a person not resident in
Interpretation.
7. (1) For
the purposes of these rules—
(ii) “investments”
includes securities, stocks and shares;
(iv) “life insurance
business”23[R8] means
life insurance business as defined in clause (11) of section 2 of the Insurance Act, 1938 (4 of 1938) ;
(v) “rule” means a
rule contained in this Schedule.
(2) References in these rules to the Insurance Act, 1938 (4 of
1938), or any provision thereof, shall, in relation to the Life Insurance
Corporation of India, be construed as references to that Act or provision as
read with section 43 24[R9] of the Life Insurance Corporation Act, 1956
(31 of 1956).
[R1]Substituted by the Finance Act, 1976, w.e.f. 1-4-1977
[R2]Inserted by the Finance (No. 2) Act, 1998, w.r.e.f. 1-4-1989
[R3]Substituted for “43A” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Earlier, “43A” was substituted for “43” by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[R4]Omitted by the Finance Act, 1988, w.e.f. 1-4-1989
[R5]See rule 6E for limits prescribed for amount that can be carried over to a “reserve for unexpired risk” : (50 per cent of net premium in case of fire or miscellaneous insurance business ; 100 per cent of net premium in case of marine insurance business and 100 per cent of net premium where insurance business relates to fire insurance or engineering insurance and which provides insurance for terrorism risks)
[R6]Omitted by the Finance Act, 1976, w.e.f. 1-4-1977. Earlier clause (i) was amended by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967
[R7]Omitted by the Finance Act, 1976, w.e.f. 1-4-1977
[R8]Clause (11) of section 2 of the
Insurance Act, 1938 defines “life insurance business” as follows :
‘(11) “life insurance business” means
the business of effecting contracts of insurance upon human life, including any
contract whereby the payment of money is assured on death (except death by
accident only) or the happening of any contingency dependent on human life, and
any contract which is subject to payment of premiums for a term dependent on
human life and shall be deemed to include—
(a) the
granting of disability and double or triple indemnity accident benefits, if so
provided in the contract of insurance,
(b) the
granting of annuities upon human life, and
(c) the granting of superannuation allowances and annuities payable out of any fund applicable solely to the relief and maintenance of persons engaged or who have been engaged in any particular profession, trade or employment or of the dependants of such person;
[R9] For text of section 43 of the Life Insurance Corporation Act, 1956, see Appendix One.