Section 55 is the substantive equivalent of 1961 s. 44 read with the First Schedule. It carves insurance business — life, general, mutual, co-operative-society — out of the ordinary computation regime: profits and gains are computed…
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ITA 2025 · Section 55
Section 55 — INSURANCE BUSINESS — COMPUTATION AS PER SCHEDULE XIV
Section 55 is the substantive equivalent of 1961 s. 44 read with the First Schedule. It carves insurance business — life, general, mutual, co-operative-society — out of the ordinary computation regime: profits and gains are computed exclusively as per Schedule XIV. The non obstante construction overrides ss. 26-54 (PGBP), House Property, Capital Gains, Other Sources, and s. 390(5)/(6) (return-filing). This section is short but powerful — the entire computation engine for insurance assessees lives in Schedule XIV.
STATUTORY ARCHITECTURE
Section 55 is one of two computation-by-Schedule provisions in PGBP (the other being s. 56 read with Sch. XIV for FIs and s. 60 for shipping). For LIC / GIC / private life insurers / general insurers / re-insurers / mutual insurance / co-operative insurance societies, the entire taxable profit follows Schedule XIV — actuarial-surplus method for life, IRDAI-template revenue-account method for general, and similar for mutual / co-operative. Capital gains on investments held by an insurer are NOT taxed under Capital Gains chapter — they are absorbed into Sch. XIV computation.
PLANNING NOTES
(i) For listed life-insurer clients (HDFC Life, ICICI Pru, SBI Life, Max Life), reconcile actuarial-surplus per IRDAI-Form-A with s. 55-Sch. XIV chargeable surplus. (ii) For general insurers (ICICI Lombard, Bajaj Allianz, SBI General, etc.), the IRDAI-prescribed revenue-account format flows directly into Sch. XIV. (iii) For mutual / co-operative insurance societies, mutuality-principle limited applicability — Schedule XIV computation is exclusive. (iv) Litigation watchpoints: deductibility of solvency-margin transfers, tax-treatment of investment-income earmarked for policyholder funds, FRR / IBNR provisions.
CROSS-REFERENCES