The Central Board of Direct taxes vide notification dated 16th August, 2023 has issued the Income tax Amendment (Sixteenth Amendment), Rules, 2023. The amendment provides that where a sum is received by an assessee for the first time under the life insurance policy during the previous year, the income chargeable to tax in the first previous year shall be computed in accordance with the formula A-B where, –
- A = the sum or aggregate of sum received under the life insurance policy during the first previous year; and
- B = the aggregate of the premium paid during the term of the life insurance policy till the date of receipt of the sum in the first previous year that has not been claimed as deduction under any other provision of the Act;
Where the sum is received under the life insurance policy during the previous year subsequent to the first previous year, the income chargeable to tax in the subsequent previous year shall be computed in accordance to the formula C-D, where-
- C = the sum or aggregate of sum received under the life insurance policy during the subsequent previous year; and
- D = the aggregate of the premium paid during the term of the life insurance policy till the date of receipt of the sum in the subsequent previous year not being premium which –
(a) has been claimed as deduction under any other provision of the Act; or
(b) is included in amount ‘B’ or amount ‘D’ of this rule in any of the previous year or years.
