1. The profit of life insurance business shall be calculated separately.-

If any person is conducting life insurance business at any time of any income year, the profit and gain arising from it shall be calculated separately from the income, profit and gain of his other business.

2. Computation of Profits and gains of Life Insurance Business.-

Except for pension and annuity business, one of the following methods shall be followed in computing the profits and gains of life insurance business, namely:-

(a) deducting management expenses from the gross external receipts of the said life insurance business in the relevant income year; or

(b) the annual average surplus determined after adjusting the surplus or deficit obtained from the valuation by the actuary for the last inter-assessment period before the end of the year for which the tax is to be assessed, from which any surplus or deficit determined during any previous inter-assessment period or any business in computing profits and gains, any expenditure other than allowable expenditure under the provisions of Sections 49-53, whichever is greater, shall be excluded:

Provided that the allowable management expenses shall not exceed the following limits, namely:-

(i) in the case of a single premium life insurance policy, 7.5% (seven and five percent) of the premium received in the relevant income year, shall be added thereto;

(ii) in the case of other life insurance policies where the number of annual premiums in the first year is less than 12 (twelve) or in the case of life insurance policies where the annual premium is payable for a period of less than 12 (twelve) years, of each such first year’s premium or the premium received for each income year concerned; 7.5% (seven and five percent), shall be added;

(iii) in the case of all other life insurance policies, 90% (ninety percent) of the first years premium received in the relevant income year, shall be added thereto;

(iv) 12% (twelve percent) of all renewed premiums received in the relevant income year.

3. Calculation of profits and gains of pension and annuity business.—

the profits and gains of pension and annuity business shall be deemed to be the annual average surplus determined in clause (b) of section 2.

4. Deduction.-

In case of surplus calculation-

(a) three-fourths of the sums paid or saved or spent on behalf of policyholders under clause (b) of clause (b) of clause 2 of clause (b) in the life insurance business shall be paid or saved or spent on behalf of members of an approved superannuation fund in computing the surplus under section 3 as deductible expenses 3/4 (three-fourths) to be deducted:

Provided that-

(1) In the first computation for any surplus under this section no surplus or payment for any previous inter-assessment period balance shall be forwarded;

(2) If any amount reserved for the policy holder or the members of the approved superannuation fund ceases to be reserved, and the amount is not paid or spent on behalf of the policy holder or the members of the approved superannuation fund, as the case may be, half or 3/4 three-fourths or the whole of the said amount If the portion has previously been allowed as a deduction, the reservation of the said amount shall be deemed to be part of the surplus for the period during;

(b) any depreciation or loss incurred on the recovery of any security or other property, any amount reserved in any account or valuation of balance certificate by an actuary for the purpose of meeting the same shall be excluded in computing the surplus and any increase realized on the transfer of the security or other property or if the profit accrues to the actuarially valued securities, it shall be included in the surplus:

Provided that if it appears to the Deputy Commissioner of Taxes, after inquiry and in consultation with the Insurance Regulator and having regard to the necessity of making reasonable provision for bonus and incidentals participating policy holders, that the factors used in determining the rate of interest or other liabilities of insurance are the valuation of securities and other assets, which is factually inconsistent with and resulting in an artificial decrease in the respective surplus, in that case, for the purposes of this paragraph, the necessary adjustment shall be made by authorizing the increase or depreciation of the respective securities and other assets to increase the surplus as much as may be considered just;

(c) No tax on interest shall be charged security issued by the Government on such condition that the interest arising shall not be chargeable to tax.

5. Adjustment of tax paid by way of deduction at source.-

If tax is assessed on the profits and gains of a life insurance business on the basis of the annual average surplus published through inter-assessment applicable for a period exceeding 12 (twelve) months in any year, in computing the tax payable for that year, the tax payable in that income year no credit shall be given for tax under section 158, but credit shall be given on the basis of the annual average of tax paid by way of deduction at source from interest on securities or other sources for the period.

6. Computation of profits and gains of other insurance business.—

(1) The profit balance of any insurance business other than life insurance, as shown in the annual statement of accounts in accordance with the provisions of the Insurance Act, 2010 (Act No. 13 of 2010), the profits and gains of such insurance business. shall be treated as and adjustment of the said position for the purpose of excluding any expenditure other than allowable expenditure under Sections 49-53 in computing profits and gains shall be made and for life insurance business the profit and loss arising from investments and depreciation or appreciation shall be shown in the statement of profit as per clause 4.

(2) In any year, the amount deducted under sub-section (1) from the premium-derived income for that year, including the amount deducted or accrued in respect of exceptional losses in previous years (reduced by payment from such amount in respect of exceptional losses or accruals), shall be the premium-derived average income of the preceding 3 (three) years, whichever is higher, shall not exceed.

(3) Notwithstanding anything to the contrary contained in this Act, where any amount is paid, set aside or transferred out of the amount deducted under sub-section 2) for any purpose other than to meet any exceptional loss, in the year in respect of which it is made, the said amount together with other premium-derived income of the company in that year shall be deemed to be the premium-derived income of the company for that year; and in the case of winding-up or cessation of business of the company (where this paragraph applies), the sum of the amount deducted under sub-section (2) together with the other income of the company in the year in which the winding-up of the company commenced or the business ceased, whichever is earlier ( (reduced as a result of payment out of the said amount to meet exceptional losses) shall be treated as income of the said company for the said year.

Explanation.- For the purposes of this paragraph-

(a) “Exceptional loss” means a loss exceeding 50% (fifty percent) of the average premium income for any year or 50% (fifty percent) of the average premium income of the preceding three years, whichever is greater and the total worldwide income of a company if it is proportionate to its premium income arising from Bangladesh, the said income shall be considered as the total premium income of the said company;

(b) the total global income of any such Bangladeshi non-resident life insurance company, the profits and gains of any life insurance business carried on in Bangladesh shall be calculated in the manner described in these paragraphs, as determined by actuarial valuation at specified intervals.

7. Profits and gains of non-resident persons.-

The profits and gains of the Bangladeshi branches of any such insurance company not resident in Bangladesh may, in the absence of reliable and sufficient information, be determined in such proportion to the total worldwide income of the company as is the ratio between the premium income arising from Bangladesh and the total premium income of the company. exists.

Explanation: For the purposes of this paragraph, the total worldwide income of any such non-resident life insurance company, as determined by actuarial valuation at specified intervals, shall be computed in the manner described in these paragraphs for computing the profits and gains of any life insurance business carried on in Bangladesh.

8. Mutual Insurance Association.—

In determining the profits of any insurance business carried on through a mutual insurance association, the provisions of this Part shall apply.

9. Explanation. For the purposes of this Schedule,-

(a) “gross external receipts” means interest, dividends, penalties and fees and all such sums and income arising from any source (other than premiums received from policyholders and interest and dividends on annuity funds), and repossession and sale of property or sanction of annuity; shall also include the profit received from; but gains on sale of securities or other property shall not include:

Provided that the reasonable income of the property in the possession of the taxpayer, which would have been taxed under section 36 but for the provisions of section 47, shall be computed on the basis of the provisions of the aforesaid section and from the said gross income the expenditure allowable under the said section shall be allowed;

(b) “Management Expenses” means all moneys including commissions expended exclusively for the management of life insurance business, and if a company carries on any other class of business including life insurance business, it shall also include a fair proportionate share of the moneys expended in the general management of such business as a whole. Bonuses or any other sums paid to policy holders or reserved for the purpose, and depreciation of securities or other assets and losses on realization and any expenditure other than allowable expenditure under section 48 in computing the profits and gains of any business shall be treated as management expenditure. shall not;

(c) “life insurance business” means life insurance business as defined in section 5 2) of the Money Insurance Act, 2010 (Act No. 13 of 2010);

(d) “security” shall include stocks and shares;

(e) “pension and annuity business” means any life insurance business relating to a contract with a trustee of an approved superannuation fund, in which case the contract concerned

(i) executed solely for the purpose of the said fund, and

(ii) The person carrying on the business of insurance shall carry on the business in the manner in which the contract is entered into in order to protect against liability arising contrary to the contract.