Schedule XIV explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Schedule XIV is the Schedule that section 55 of the Income-tax Act, 2025 points to for insurance business. It sets out how the profits and gains of life insurance business, of other insurance business and of a non-resident insurer working through branches in India are worked out. This article explains the Schedule as per the Income-tax Act, 2025 as amended by the Finance Act, 2026.
Schedule XIV has three parts and six paragraphs. Life insurance business is computed separately, on the annual average of the surplus found by the actuarial valuation for the last inter-valuation period. Other insurance business starts from the profit before tax and appropriations in the profit and loss account, with four adjustments. A non-resident insurer may, where there is no more reliable data, be taxed on the share of its global income that matches its India premium share. The Finance Act, 2026 changed one word in paragraph 4(1)(a) and added paragraph 4(3), both with effect from 1 April 2026.
Later amendments, the Income-tax Rules, 2026 and notifications should be checked before you rely on this article for a filing.
Where Schedule XIV sits
The heading of the Schedule reads "" and "Insurance business". Section 55 is the provision in the computation of business income that brings the Schedule into play; our note on sections 54 and 55 covers that section. The Schedule does not stand alone: it relies on the general deduction rules in the Chapter on business income, such as section 35 on amounts not deductible and section 34 on general deductions. If your accounts team prepares the books of an insurer or an insurance intermediary, our books of accounts compliance service can help with the working papers.
Commencement is by section 1(3): save as otherwise provided, the Act comes into force on the 1st April, 2026.
Part A: Life insurance business (paragraphs 1 to 3)
Paragraph 1: separate computation. If a person is engaged in life insurance business during the tax year, the profits and gains of that business are computed separately from the profits and gains of any other business. The consequence is that a company carrying on life insurance and other activities cannot blend the results.
Paragraph 2(1): the measure of profit. The profits and gains of life insurance business are the annual average of the surplus, after adjusting the surplus or deficit disclosed by the actuarial valuation made as per the Insurance Act, 1938 for the last inter-valuation period ending before the commencement of the tax year. The adjustment is made so as to exclude any surplus or deficit from an earlier inter-valuation period. Two things follow. First, the figure is an average spread over the valuation period, not the result of a single year's accounts. Second, the valuation must be the one made as per the Insurance Act, 1938; that Act is outside the Income-tax Act, so readers should check it directly.
Paragraph 2(2): inadmissible expenditure. Any expenditure that is inadmissible under section 34 in computing the profits and gains of a business is added to the profits and gains of the life insurance business.
Paragraph 3: credit for tax deducted at source. Where the assessment of life insurance profits rests on the annual average of a surplus disclosed for an inter-valuation period of more than twelve months, then in computing the income-tax payable for that year the credit is dealt with in two ways. Credit is not given as per section 390 for the income-tax paid in the preceding tax year. Credit is given for the annual average of the income-tax paid by deduction at source from interest on securities or otherwise during that period.
Part B: Other insurance business (paragraph 4)
Paragraph 4(1): starting point and four adjustments. The profits and gains of any insurance business other than life insurance are the profit before tax and appropriations as disclosed in the profit and loss account prepared as per the Insurance Act, 1938, or the rules made under it, or the Insurance Regulatory and Development Authority Act, 1999, or the regulations. Four adjustments apply.
| Clause | Adjustment | Effect |
|---|---|---|
| (a) | Expenditure or allowance, including any amount debited to the profit and loss account as a provision for tax, dividend, reserve or any other provision as may be prescribed, that is inadmissible under sections 28 to 54 | Added back, subject to the other provisions of this paragraph |
| (b) | Gain or loss from realisation of investments, if not already credited or debited to the profit and loss account | Added or deducted, as the case may be |
| (c) | Provision for diminution in investment value debited to the profit and loss account | Added back |
| (d) | Such amount carried over to a reserve for unexpired risks as may be prescribed | Allowed as a deduction |
The detail of the prescribed provisions and of the reserve for unexpired risks is left to the Income-tax Rules, 2026; see our rule-wise guides.
Paragraph 4(2): later deduction under section 37. The amount payable under section 37 that is added back under paragraph 4(1)(a) is allowed as a deduction in the tax year in which it is actually paid. Our note on section 37 explains the payment-basis rule.
Paragraph 4(3): later deduction under section 35(b). The amount not deductible under sub-clause (i) or (ii) of section 35(b), which is added back under paragraph 4(1)(a), is allowed subsequently as a deduction in a tax year in accordance with the provisions of that sub-clause, as the case may be.
Part C: Other provisions (paragraphs 5 and 6)
Paragraph 5(1): non-resident insurer. The profits and gains of a non-resident person engaged in 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 corresponds to the proportion that his premium income derived from India bears to his total premium income. Paragraph 5(2) adds that, for life insurance business, the global income of a non-resident is computed as per this Act for computing the profits and gains of life insurance business carried on in India.
Paragraph 6: interpretation. For the Schedule, "investments" include securities, stocks and shares. "Life insurance business" means life insurance business as defined in section 2(11) of the Insurance Act, 1938. Under paragraph 6(2), references to the Insurance Act, 1938 regarding the Life Insurance Corporation of India are treated as references to that Act or to section 43 of the Life Insurance Corporation Act, 1956. Check those laws separately.
What the Finance Act, 2026 changed
Two footnotes at the Schedule record changes, both with effect from 1-4-2026:
- In paragraph 4(1)(a), the words "this paragraph" were substituted for "this rule" by the Finance Act, 2026, w.e.f. 1-4-2026. It corrects the internal reference only.
- Paragraph 4(3) was inserted by the Finance Act, 2026, w.e.f. 1-4-2026.
A worked example
All amounts below are assumed. Northbridge Insurance Branch is a non-resident insurer working through its branches in India. There is no more reliable data to show its India profits. Its total premium income is Rs. 50,00,00,000, of which Rs. 10,00,00,000 is derived from India, and its global income is Rs. 3,00,00,000.
The India premium share is Rs. 10,00,00,000 divided by Rs. 50,00,00,000, which is one-fifth. Under paragraph 5(1) the profits and gains may be deemed to be one-fifth of Rs. 3,00,00,000, that is Rs. 60,00,000. The word "may" matters: the deeming applies only in the absence of more reliable data.
For a general insurer, say Harbour General Insurance Ltd., suppose the profit and loss account shows a profit before tax and appropriations of Rs. 8,00,000 after debiting a provision of Rs. 1,00,000 that is inadmissible under sections 28 to 54, and after crediting nothing for a gain of Rs. 50,000 from realising investments. Paragraph 4(1) adds back Rs. 1,00,000 and adds the Rs. 50,000 gain, as it was not credited to the account. The starting point of Rs. 8,00,000 becomes Rs. 9,50,000 before any other adjustment.
Need help with insurance business computations?
Where the numbers are drawn from an actuarial valuation or an insurer's regulated accounts, the choice of period and the add-backs need care. A planning review through our tax planning advisory service can map the Schedule against your accounts.
Key takeaways
- Life insurance business is computed separately, on the annual average of the surplus for the last inter-valuation period ending before the tax year.
- Other insurance business starts from the profit before tax and appropriations, with four listed adjustments.
- Paragraph 4(3) is new from 1-4-2026 and allows a later deduction of the amount held back under section 35(b).
- A non-resident insurer's profits may be deemed on a premium-proportion basis only where there is no more reliable data.
Read next
- Sections 54 and 55: prospecting for mineral oils and insurance business
- Section 35: amounts not deductible in computing business income
- Section 34: the general deduction
- Section 37: deduction on actual payment
- Schedule XV: the section 123 deduction list
- Chapter IV: computation of total income
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.