Rule 59 — Computation of income chargeable to tax under section 92(2)(l). Made under s.92 of the Income-tax Act, 2025.
Rule 59 gives effect to Section 92 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) computes the income chargeable under section 92(2)(l) where a person receives any sum, including the amount allocated by way of bonus, during a tax year under a life insurance policy.
Clause (i) covers the first tax year, meaning the year in which a sum is received for the first time under the policy. The income is A minus B. A is the sum or aggregate of sums received under the policy during that first tax year. B is the aggregate of the premium paid during the term of the policy till the date of receipt of the sum in the first tax year that has not been claimed as deduction under any other provision of the Act.
Clause (ii) covers a subsequent tax year. The income is C minus D. C is the sum or aggregate of sums received under the policy during the subsequent tax year. D is the aggregate of premium paid during the term of the policy till the date of receipt of the sum in that subsequent year, excluding premium which has been claimed as deduction under any other provision of the Act or which is included in amount B or amount D of the sub-rule in any preceding year.
Sub-rule (2) fixes what counts as a sum received. It means any amount, by whatever name called, received under the policy that is not excluded from total income under Schedule II [Table: Sl. No. 2], other than a sum received under a unit linked insurance policy or a sum being income referred to in section 92(2)(d).
Section 92(2)(l) charges a receipt under a life insurance policy that does not qualify for exclusion, but does not say how the premium already paid is to be recognised or what happens when a policy pays out in more than one year. The rule supplies a running computation with two anti-duplication guards — premium already deducted elsewhere under the Act is out, and premium already used in an earlier year's computation is out — so the same rupee of cost cannot be relieved twice.
The exclusions in B and D do most of the work. Premium that has been claimed as deduction under any other provision of the Act never enters the subtraction at all, and in a subsequent year premium already counted in an earlier B or D is stripped out again — so the aggregate premium in the policy documents is rarely the figure that goes into the formula. The scope rule in sub-rule (2) is equally decisive: a sum that Schedule II [Table: Sl. No. 2] excludes from total income is not a sum received for this rule, so the computation runs only on receipts left chargeable, and unit linked policies and section 92(2)(d) income are carved out entirely — those are dealt with elsewhere, not here. Note the label: the rule computes income chargeable under section 92(2)(l), not capital gains.
A person holds a life insurance policy on which the receipt is not excluded under Schedule II [Table: Sl. No. 2]. Premiums aggregating Rs 9,00,000 have been paid, of which Rs 1,00,000 was claimed as a deduction under another provision of the Act. In the first tax year the policy pays Rs 11,00,000 including bonus; A is Rs 11,00,000, B is Rs 8,00,000, so Rs 3,00,000 is chargeable. In a later year a further Rs 4,00,000 is received, with Rs 50,000 more premium paid meanwhile and not deducted elsewhere; D is that Rs 50,000 alone, because the Rs 8,00,000 already sat in B, so Rs 3,50,000 is chargeable in the subsequent year.
A reader meets it when a life insurance policy pays a sum that Schedule II does not exclude, and the amount has to be reported as income under section 92(2)(l) in the return for that year and for each later year in which the policy pays again.
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 tax year that has not been claimed as deduction under any other provision of the Act
is included in amount 'B' or amount 'D' of this sub-rule in any of the year or years preceding the tax year