Income-tax Rules, 2026 | Rule 59 of 333

Income-tax Rule 59 — Taxable receipts from life insurance policies

Reviewed by CA Nikhil Gupta · Last reviewed 27 August 2026

Finin2min legal explainer · Primary authority: CBDT Notification No. 22/2026 (G.S.R. 198(E))

Income-tax Rule 59 — archived legal extract

Archived extract or condensed summary for Rule 59 (taxable receipts from life insurance policies); NOT authenticated Gazette text. Some tables have been flattened. Consult the official signed CBDT Gazette and later amendments.

59. Computation of income chargeable to tax under section 92(2)(l).– (1) For the purposes of section 92(2)(l), if a person receives any sum, including the amount allocated by way of bonus, during a tax year under a life insurance policy, then the income chargeable to tax under the said section shall be computed in the following manner:— (i) where the sum is received for the first time under the life insurance policy during the tax year (herein referred to as first tax year), the income chargeable to tax in the first tax year shall be computed in accordance with the formula— A-B Where, — A = the sum or aggregate of sum received under the life insurance policy during the first tax year; and 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; and (ii) where the sum is received under the life insurance policy during the tax year subsequent to the first tax year (hereinafter referred to as subsequent tax year), the income chargeable to tax in the subsequent tax year shall be computed in accordance with the formula, — C-D Where, — C = the sum or aggregate of sum received under the life insurance policy during the subsequent tax year; and D = the aggregate of the premium paid during the term of the life insurance policy till the date of receipt of the sum in the subsequent tax year not being premium which— (a) has been claimed as deduction under any other provision of the Act; or (b) is included in amount 'B' or amount 'D' of this sub-rule in any of the year or years preceding the tax year. (2) For the purposes of this rule, the sum received under a life insurance policy shall mean any amount, by whatever name called, received under such policy that is not excluded from the total income of the tax year in accordance with the provisions of Schedule II [Table: Sl.No.2], other than the sum— (a) received under a unit linked insurance policy; or (b) being the income referred to in section 92(2)(d).

In two minutes: Taxable receipts from life insurance policies

Where a life-insurance policy receipt falls within section 92(2)(l), Rule 59 prescribes a receipt-minus-eligible-premiums computation for the first and subsequent tax years.

In the first receipt year, calculate A minus B: A is relevant policy receipts including allocated bonus; B is qualifying premiums paid to receipt date and not claimed elsewhere. In subsequent years apply C minus D, excluding premiums already used in B or an earlier D.

When Rule 59 applies — decision workflow

Confirm that the transaction or taxpayer is governed by Rule 59 and its linked provision in the Income-tax Act, 2025.
In the first receipt year, calculate A minus B: A is relevant policy receipts including allocated bonus; B is qualifying premiums paid to receipt date and not claimed elsewhere. In subsequent years apply C minus D, excluding premiums already used in B or an earlier D.
For taxable receipts from life insurance policies, test the specific exceptions, tax-year dates and cumulative restrictions in the linked provision.
For Rule 59, document how taxable receipts from life insurance policies was resolved and the current rule version used for the relevant year.

Worked compliance example

Suppose the first taxable policy receipt is ₹9 lakh and eligible previously unclaimed premiums total ₹6 lakh. A minus B is ₹3 lakh before any other statutory adjustments. In a later receipt year, premiums already used in B cannot be deducted again.

This taxable receipts from life insurance policies illustration demonstrates a test; it is not evidence that a claim or transaction actually qualifies.

Documents and calculation evidence

Keep complete policy statements, premium schedule from inception, details of earlier deductions, receipt dates and year-by-year computations.

For this taxable receipts from life insurance policies analysis, document the exact tax year and triggering transaction or reporting date.
Preserve calculations and a source-evidence trail specifically supporting taxable receipts from life insurance policies, including prescribed certification.
Retain all required attachments and the filing acknowledgement for Rule 59; verify the current form against its notified instructions.
Reconcile taxable receipts from life insurance policies to the relevant ledger accounts, tax-return disclosures and counterparty confirmations.

Common error to avoid

Double-deducting the same premiums in successive policy-receipt years, or treating every insurance payout as automatically exempt.

For taxable receipts from life insurance policies, confirm whether the Income-tax Act, 2025 or transition/savings provisions govern the period; old forms are not automatically accepted.

Frequently asked questions

Does Rule 59 create a benefit by itself?

No. For taxable receipts from life insurance policies, entitlement depends on the linked Income-tax Act, 2025 section, the statutory conditions and the applicable notified version of Rule 59.

What is the first verification step?

What evidence would support this treatment?