Income Tax Ordinance, 2001

FOURTH SCHEDULE

From: 2023-07-01 - To: 0000-00-00 (See Section 99) RULES FOR THE COMPUTATION OF THE PROFITS AND GAINS OF INSURANCE BUSINESS Profits on Life Insurance to be computed separately 1. The profits and gains of a taxpayer carrying on life insurance business chargeable under the head “Income from Business” shall be computed separately from the taxpayer’s income from other business. 1[Income from other business shall be profit or loss before tax as per profit and loss account prepared under the Insurance Ordinance, 2000 (XXXIX of 2000), excluding any surplus appropriation made during the year.] Computation of Profits and Gains of Life Insurance Business 2[2. The profits and gains of a life insurance business shall be the current year’s surplus appropriated to profit and loss account prepared under the Insurance Ordinance, 2000 (XXXIX of 2000), as per advice of the Appointed Actuary, net of adjustments under sections 22(8), 23(8) and 23(11) of the Insurance Ordinance, 2000 (XXXIX of 2000) so as to exclude from it any expenditure other than expenditure which is, under the provisions of Part IV of Chapter III, allowed as a deduction in computing profits and gains of a business to the extent of the proportion of surplus not distributed to policy holders.] Computing the Surplus under Rule 2 3. (1) The following 3[provisions] shall apply in computing the surplus for the purposes of rule 2, namely:– the amounts paid to, or reserved for, or expended on behalf of policy-holders shall be allowed as a deduction; any amount either written off or reserved in the accounts, or through the actuarial valuation balance sheet to meet depreciation, or loss on the realization of investments shall be allowed as a deduction, and any sums taken credit for in the accounts or actuarial valuation balance sheet on account of appreciation, or gains on the realization of investments 4[shall be included in the surplus]; and profit on debt 5[accrued] in the inter-valuation period in respect of any securities of the Federal Government which have been issued or declared to be income tax free shall not be excluded, but shall be exempt from tax 6[***]. (2) For the purposes of clause (a) of sub-rule (1) –…