Amendment of First Schedule.
104. In the First Schedule to the Income-tax Act, in rule 5, after clause (c), the following proviso shall be inserted, namely:––
“Provided that any sum payable by the assessee under section 43B, which is added back in accordance with clause (a) of this rule, shall be allowed as deduction in computing the income under the said rule in the previous year in which such sum is actually paid.”.
Notes on Clauses:
Clause 104 of the Bill seeks to amend rule 5 of the First Schedule of the Income-tax Act relating to computation of profits and gains to other insurance business.
The said rule provides that profits and gains of any business of insurance other than life insurance shall be taken to 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 rules made thereunder or the provisions of the Insurance Regulatory and Development Authority Act, 1999 or the regulations made thereunder, subject to the conditions that any expenditure debited to the profit and loss account which is not admissible under the provisions of sections 30 to 43B shall be added back; any gain or loss on realisation of investment shall be added or deducted, as the case may be, if the same is not credited or debited to the profit and loss account; any provision for diminution in the value of investment debited to the profit and loss account, shall be added back.
It is proposed to insert a new proviso to the said rule so as to provide that any sum payable by the assessee under section 43B which is added back in accordance with clause (a) of the said rule shall be allowed as deduction in computing the income in the previous year in which such sum is actually paid.
This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-2021 and subsequent assessment years.
