Tax on income from life insurance business under Assessment of Companies :

Section 115B provides for a concessional rate of tax for taxing the profits and gains derived from the business of life insurance. Under these provisions, in the case of an assessee whose total income includes any profits and gains derived from the business of life insurance computed in accordance with the First Schedule to the Income-tax Act, 1961, the income-tax payable shall be the aggregate of (i) the amount of income-tax calculated on the income from life insurance business included in total income at the rate of 12½% and (ii) the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of profits and gains from the life insurance business.

Income accruing or arising to a company from life insurance business referred to in section 115B would not be subject to MAT.

Taxation of investment income/loss of non-life insurance business: Rule 5 of the First Schedule to the Income-tax Act, 1961 provides that the profits and gains of non-life insurance business would be the profit before tax and appropriations as disclosed in the profit and loss account prepared in accordance with the provisions of the Insurance Act, 1938 or the IRDA Act, 1999, after adjustment for unexpired risk and disallowances under sections 30 to 43B. Any provision for diminution in the value of investment debited to profit and loss account has to be added back. Any gain or loss on realization of investments not credited or debited to profit and loss account, shall be added or deducted, as the case may be.