Chapter IV - Computation of Total Income
Section 55
Section 55: computation of profits for insurance business
Section 55 is a short but powerful override provision: it directs the computation of insurance-business profits and gains to Schedule XIV despite the contrary computation provisions expressly listed in the section.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Irrespective of anything to the contrary contained in the provisions of this Act for computing income under the head "Income from house property", "Capital gains" or "Income from other sources", or in section 390(5) and (6), or in sections 26 to 54, the profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a co-operative society, shall be computed as per the provisions of Schedule XIV.
Introduction
Insurance businesses use a special computation code. Section 55 sends their profits and gains to Schedule XIV, including when the business is carried on by a mutual insurance company or co-operative society.
Key takeaways
Special computation
Insurance-business profits and gains are computed under Schedule XIV.
Express scope
The section includes insurance carried on by a mutual insurance company or a co-operative society.
What Section 55 says
Section 55 provides that, irrespective of anything to the contrary in the Act's provisions for computing income under "Income from house property", "Capital gains" or "Income from other sources", or in Section 390(5) and (6), or in sections 26 to 54, the profits and gains of any business of insurance - including insurance business carried on by a mutual insurance company or by a co-operative society - are computed as per the provisions of Schedule XIV.
Which computation framework applies
First identify whether the taxpayer's activity is a business of insurance. If so, compute its profits and gains under Schedule XIV instead of applying the ordinary rules overridden by Section 55.
The ownership form does not remove the rule: mutual insurance companies and co-operative societies are expressly included.
Read Schedule XIV alongside the override
The section specifies the ordinary income-head and business-computation provisions it overrides. Use Schedule XIV's special rules for the insurance-business result, then reconcile other income separately where relevant.
Step-by-step flow for applying Section 55
- 1
Does the assessee carry on a business of insurance?
This includes insurance business carried on by a mutual insurance company or a co-operative society.
- No: Section 55 does not apply; compute income under the ordinary provisions.
- Yes: Go to the next step.
- 2
Set aside the overridden provisions
For the insurance-business profits, do not apply the rules for house property, capital gains or other sources, Section 390(5) and (6), or sections 26 to 54, to the extent they are contrary.
- 3
Compute the profits and gains under Schedule XIV
Section 55 does not itself state any computation figures. The method is in Schedule XIV.
- 4
Deal with other income
Income that is not part of the business of insurance is computed under its own head, as the section's existing explanation notes.
Practical checklist
Do
- Document the type of insurance business and the applicable Schedule XIV computation.
- Reconcile statutory insurance accounts to the Schedule XIV tax result.
Avoid
- Do not calculate insurance-business profits solely using ordinary Sections 26–54 deductions where Section 55 overrides them.
Illustrative example
Scenario: a co-operative society running an insurance business
Hypothetical facts (illustration only, not a real taxpayer): A co-operative society carries on a business of insurance for its members. Its accountant first prepares the computation as for an ordinary business under sections 26 to 54, treating some items as capital gains and income from other sources.
Is Section 55 triggered?
Yes. The society carries on a business of insurance, and co-operative societies are expressly covered.
Effect of the override
The ordinary business-computation sections and the specified head-wise rules do not govern the profits of the insurance business, to the extent they are contrary.
Correct approach
Redo the computation of insurance-business profits under Schedule XIV. Do not apply sections 26 to 54 to those profits.
Outcome
- The insurance-business result must follow Schedule XIV.
- The legal form (company, mutual or co-operative society) does not change this outcome.
Glossary
- Schedule XIV
- The Act's special computation schedule for profits and gains of an insurance business.
- Mutual insurance company
- An insurance business carried on on a mutual basis, expressly covered by Section 55.
Frequently asked questions
How does Section 55 affect the normal computation rules for insurance business?
Insurance-business profits are computed under Schedule XIV despite contrary provisions in sections 26 to 54 and the other computation provisions expressly listed in Section 55.
Does Section 55 apply to mutual insurance companies and co-operative societies too?
Yes - the section explicitly covers insurance business carried on by a mutual insurance company or by a co-operative society, not just conventional insurance companies.
Where are the detailed insurance computation rules?
Section 55 directs the computation to Schedule XIV of the Act.
Need help applying this provision to your situation?
Get expert guidance on insurance business tax computationLast updated 9 October 2026