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CMA Final · Direct Tax Laws and International Taxation · Business Restructuring

A non-resident insurer carries on insurance business in India through its branches. Reliable data on India profits is unavailable. Its global income is Rs 600 crore, total premium income is Rs 4,000 crore, and premium income derived from India is Rs 480 crore. Under Schedule XIV of the Income-tax Act, 2025, what profits may be deemed to arise in India?

Rs 72 crore. Where more reliable data is absent, the Indian profit is the global income apportioned by the ratio of India premium to total premium. That ratio is 480/4,000, or 12 percent, and 12 percent of Rs 600 crore equals Rs 72 crore.

  1. ARs 48 crore
  2. BRs 72 croreCorrect
  3. CRs 80 crore
  4. DRs 120 crore

Explanation

Paragraph 5(1) allows profits to be deemed as the proportion of global income equal to India premium over total premium. Proportion = 480/4,000 = 12%. Rs 600 crore x 12% = Rs 72 crore. Rs 48 crore wrongly uses 8%, and Rs 80 crore applies the proportion to a different base.

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