Sch - 08 - THE EIGHTH SCHEDULE - COMPUTATION OF PROFITS OF THE INSURANCE BUSINESS - Direct Taxes Code Bill, 2009

THE EIGHTH SCHEDULE COMPUTATION OF PROFITS OF THE INSURANCE BUSINESS 1. The profits of the business of life insurance shall be the profit determined in the Shareholders'Account (Non-Technical Account) in accordance with the Insurance Act, 1938. 2. The profits referred to in rule 1 shall be,- (a) increased by the aggregate of the amounts referred to in sub-section (2) of section 31 to the extent such amounts are not included in the profits referred to in that rule; and (b) decreased by the amount of negative profit computed under this Schedule in respect of the business of life insurance, for any financial year immediately preceeding the relevant financial year. 3. The profits of the business of insurance other than life insurance shall be the profits disclosed in the annual accounts, copies of which are required to be furnished under the Insurance Act, 1938, to the Controller of Insurance. 4. The profits referred to in rule 3 shall be,- (a) increased by the aggregate of,- (i) the amounts referred to in sub-section (2) of section 31 to the extent such amounts are not included in the profits referred to in that rule; and (ii) the amounts referred to in sub-section (4) of section 33 and sub-section (2) of section 34 to the extent such amounts have been claimed as adeduction in computing the profits referred to in that rule; (b) decreased by the amount of negative profit computed under this Schedule in respect of the business of any insurance, other than life insurance, for any financial year immediately preceeding the relevant financial year. 5. The profits 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. 6. The profits of the business of insurance shall be treated as 'nil' if the profits determined under rules 1 to 5 is negative. 7. The profits computed under rules 1 to 5 shall be presumed to have been computed,- (a) after giving full effect to every loss, allowance or deduction referred to in sub-sections (1) to (3) of section 33, sub-section (1) of section 34 and sections 35 to section 38; (b) after giving full effect to any deduction allowable under sub-chapter-I of Chapter III in relation to the profits of the business of insurance. 8. The written down value of any business asset used in the business of insurance shall be computed as if the assessee has claimed and has been actually allowed the deduction in respect of depreciation under section 36, initial depreciation under section 37 and terminal allowance under section 38. 9. The amount of common costs (including depreciation) attributable to the business of insurance shall be determined in the prescribed manner. 10. The successor in a business reorganisation of the business of insurance shall be allowed a deduction in respect of the negative profit determined in the case of the predecessor for,- (a) the financial year immediately preceeding the financial year in which the business reorganisation has taken place if the reorganisation is on the first day of the financial year; and (b) the period beginning with the first day of the financial year and ending on the day immediately preceeding the date of business reorganisation, in any other case. 11. For the purposes of this Schedule- (a) "business of life insurance" means life insurance business as defined in clause (11) of section 2 of the Insurance Act, 1938; (b) "business of insurance" means,- (i) the business of life insurance; and (ii) the business of any insurance, not being life insurance. (c) "common costs" means cost or expenditure incurred in the course of carrying on the business of insurance and any other business. (d) "rule" means a rule contained in this Schedule; and (e) world income in relation to the business of insurance of a person not resident in India shall be computed in the manner laid down in this Act for the computation of the profits of the business of insurance carried on in India.