CMA Final · Direct Tax Laws and International Taxation · Business Restructuring
A non-resident insurer operates through Indian branches. Its global income, computed as required, is ₹600 crore. Total premium income is ₹4,000 crore, of which ₹500 crore is derived from India. No more reliable data is available. What profit may be deemed under Schedule XIV of the Income-tax Act, 2025?
The deemed profit is ₹75 crore. India premium of ₹500 crore is 12.5% of total premium of ₹4,000 crore, and applying that proportion to global income of ₹600 crore gives ₹75 crore, as permitted when no more reliable data is available.
- A₹75 croreCorrect
- B₹80 crore
- C₹500 crore
- D₹48 crore
Explanation
Paragraph 5(1) deems the proportion of global income equal to India premium over total premium. 500/4,000 = 12.5%, and 12.5% of ₹600 crore = ₹75 crore. The ₹80 crore option wrongly uses 600/4,000... actually 600×(500/3,750), a wrong base for the premium total.
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