2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
2.1. Basis of preparation
The accompanying standalone financial statements
are prepared and presented under the historical cost
convention, unless otherwise stated, and on accrual
basis of accounting, in accordance with accounting
principles generally accepted in India (Indian GAAP).
The Company has prepared the standalone financial
statements in compliance with the accounting standards
notified under section 133 of the Companies Act 2013
(‘the Act'), and amendments and rules made thereto,
to the extent applicable and in accordance with the
provisions of the Insurance Act, 1938, as amended
from time to time, including amendment brought by
Insurance laws (Amendment) Act, 2015, Insurance
Regulatory and Development Authority Act, 1999, The
Insurance Regulatory and Development Authority of
India (Actuarial, Finance and Investment Functions of
Insurers) Regulations, 2024 (‘the Regulation'), Master
Circular on Actuarial, Finance and Investment Functions
of Insurers dated May 17, 2024 (‘the Master Circular')
and various orders, directions and circulars issued by
the IRDAI from time to time and the practices prevailing
within the insurance industry in India. Accounting policies
applied have been consistent with those followed in the
previous year.
The management evaluates all recently issued or revised
accounting pronouncements on an ongoing basis.
2.2. Use of estimates
The Company's management makes estimates and
assumptions that affect the reported amounts of income
and expenses for the year, reported balances of assets
and liabilities, and disclosures relating to contingent
liabilities as on the date of the standalone financial
statements. The estimates and assumptions used in
the accompanying standalone financial statements are
based upon management's evaluation of the relevant
facts and circumstances as on the date of the standalone
financial statements. Actual results could differ from
those estimates. Any revision to accounting estimates is
recognised prospectively.
2.3. Revenue recognition
2.3.1. Premium income
Premium for non-linked policies is recognised as
income (net of goods and service tax) when due from
policyholders. For unit linked business, premium is
recognised as income when the associated units are
created. Premium on lapsed policies is recognised as
income when such policies are reinstated.
Products having regular premium paying plans with
limited premium payment term and/or pre-determined
policy term are treated as regular business with due
classification of premium into first year and renewal.
Premium income on products other than aforesaid is
classified as single premium.
Top up premiums are considered as single premium.
2.3.2. Reinsurance premium ceded
Reinsurance premium ceded is accounted in accordance
with the terms and conditions of the relevant treaties
with the reinsurer. Premium ceded on reinsurance is net
of profit commission on reinsurance ceded.
2.3.3. Reinsurance premium accepted
Reinsurance premium accepted is accounted in
accordance with the terms and conditions of the relevant
treaties/arrangements with the insurers.
2.3.4. Income from investments
Interest income on investment
Interest income on investments is recognised on accrual
basis. Amortisation of premium or accretion of discount
on debt securities is recognised over the remaining
term of such instruments on the basis of effective
interest rate method.
Dividend income
Dividend income, in respect of other than unit linked
business, is recognised when the right to receive dividend
is established. Dividend income, in respect of unit linked
business, is recognised on the ‘ex-dividend date'.
Securities Lending and Borrowing (SLB) fees
Fees received on lending of equity shares under
Securities Lending and Borrowing scheme (SLB) is
recognised as income over the period of the lending on a
straight-line basis.
Lease rentals on investment property
Lease rentals on investment property are recognised
on accrual basis and include only the realised rent and
does not include any notional rent, as prescribed by the
Regulation. Costs related to operating and maintenance
of investment property are recognised as expense in the
Standalone Revenue Account or Standalone Profit and
Loss Account, when incurred.
Profit or loss on sale/redemption of debt securities
Profit or loss on sale/redemption of debt securities for
other than unit linked business is the difference between
the sale consideration net of expenses and the weighted
average amortised cost as on the date of sale. Profit or
loss on sale/redemption of debt securities for unit linked
business is the difference between the sale consideration
net of expenses and the weighted average book cost as
on the date of sale.
Profit or loss on sale/redemption of equity shares,
exchange traded fund (ETF) and mutual fund
Profit or loss on sale/redemption of equity shares, equity
exchange traded fund (ETF) and mutual fund units is
the difference between the sale consideration net of
expenses and the weighted average book cost as on the
date of sale. In respect of other than unit linked business,
the profit or loss also includes the accumulated changes
in the fair value previously recognised in Standalone
Balance Sheet as “Fair Value Change Account”.
Profit or loss on sale/redemption of venture fund units
Profit or loss on sale/redemption of venture fund units
is the difference between the sale consideration net of
expenses and the weighted average book cost as on the
date of sale/redemption.
2.3.5. Income from unit linked policies
Income from unit linked policies, which includes fund
management charges, policy administration charges,
mortality charges and other charges, if any, are recovered
from the unit linked funds in accordance with terms and
conditions of policies issued and are recognised when due.
2.3.6. Fees and charges
Fees and charges include policy reinstatement fee and
loan processing fee which are recognised on receipt
basis. Interest income on policy loans is also included in
fees and charges which is recognised on an accrual basis.
2.4. Acquisition cost
Acquisition costs are costs that vary with and are
primarily related to acquisition of new and renewal
insurance contracts and have an obligatory relationship
of costs incurred to execution of insurance contracts.
These costs are expensed in the period in which they are
incurred. Clawback of commission paid, if any, in future
is accounted in the year in which it becomes recoverable.
2.5. Employee benefits
2.5.1. Short term employee benefits
Employee benefits payable within twelve months
of rendering the service are classified as short-term
employee benefits. Benefits such as salaries, bonuses,
short term compensated absences and other non¬
monetary benefits are recognised in the period in which
the employee renders the related service. All short term
employee benefits are accounted on undiscounted basis.
2.5.2. Long term employee benefits: Post-employment
The Company has both defined contribution and defined
benefit plans.
Defined contribution plan
Superannuation and National Pension Scheme:
The Company has a defined contribution scheme for
Superannuation and National Pension Scheme for
employees who opt for it. The Superannuation scheme
is managed by ICICI Prudential Life Insurance Company
Limited Superannuation Scheme and the National
Pension Scheme is managed and administered by
pension fund management companies licensed by the
Pension Funds Regulatory and Development Authority
(‘PFRDA'). The contributions made to both the schemes
are on a monthly basis, when due, and charged to
Standalone Revenue Account and Standalone Profit
and Loss Account on an undiscounted basis during the
period in which the employee renders the related service.
The Company does not have any further obligation
beyond the contributions made to the funds.
Defined benefit plans
Gratuity and Provident fund are defined benefit
obligations.
Gratuity: The gratuity benefit payable to the employees of
the Company is as per the provisions of the notified Code
on Social Security, 2020 effective from November 21,
2025 (replacing the erstwhile Payment of Gratuity Act,
1972. The gratuity liability of the Company is actuarially
determined by an independent actuary at each Balance
Sheet date using projected unit credit method.
The Company contributes towards net liabilities to ICICI
Prudential Life Insurance Company Limited Employees'
Group Gratuity Cum Life Insurance Scheme.
The Company recognises the net obligation of the
Scheme in Standalone Balance Sheet as an asset or
liability, respectively in accordance with Accounting
Standard 15 (revised 2005) (AS 15 (Revised)), ‘Employee
benefits'. The discount rate used for actuarial valuation
is based on Government securities yield. Actuarial gains
or losses arising from change in actuarial assumptions
or experience adjustments (the effects of difference
between the previous actuarial assumptions and what
has actually occurred) are recognised in the Standalone
Revenue Account and Standalone Profit and Loss Account
for the period in which they emerge. Estimated rate of
return on plan assets is based on the expected average
long-term rate of return on investments of the Fund
during the estimated term of the obligations.
Provident fund: The Company's defined benefit obligation
towards interest rate guarantee on the exempt provident
fund is actuarially determined by an independent actuary
and measured in accordance with the Guidance Note (GN
29) on Valuation of Interest Rate Guarantees on Exempt
Provident Funds under AS 15 (Revised) issued by the
Institute of Actuaries of India. The contribution paid or
payable is charged to the Standalone Revenue Account
and the Standalone Profit and Loss Account during the
period in which the employee renders the related service.
2.5.3. Other long term employee benefits
Other long term employee benefits include accumulated
compensated absences that are entitled to be carried
forward for future encashment or availment, at the
option of the employee subject to the rules framed by the
Company. The Company's liability towards accumulated
compensated absences entitlement outstanding at
the close of the year is determined actuarially, by an
independent actuary using projected unit credit method
and are recognised as a liability at the discounted
present value of the obligation as at the Balance Sheet
date. The Company assumes net liability for the above
in accordance with AS 15 (Revised). Actuarial gains or
losses arising from change in actuarial assumptions
or experience adjustments (the effects of difference
between the previous actuarial assumptions and what
has actually occurred) are recognised in the Standalone
Revenue Account and Standalone Profit and Loss
Account in the period in which they emerge.
2.5.4. Employee share based payments
The Company has established the Employee Stock Option
Scheme (‘the ESOP Scheme') and the Employee Stock
Unit Scheme ('the ESU Scheme') for eligible employees,
including whole-time directors.
Under the ESOP Scheme, eligible employees are granted
options to subscribe to equity shares of the Company,
which vest in a graded manner. The vested options may
be exercised within a specified period.
Under the ESU Scheme, eligible employees are granted
units to subscribe to equity shares of the Company at
face value, which vest in a graded manner. The vested
units may be exercised within a specified period.
The Company follows the intrinsic value method to
account for its share-based employee compensation
plans in accordance with the Guidance Note on
Accounting for Share based Payments, issued by the
Institute of Chartered Accountants of India (ICAI).
Intrinsic value is measured as the excess, if any, of
the fair market price of the underlying shares over the
exercise price on the grant date and amortised over the
vesting period. The fair market price is the latest closing
price, immediately prior to the grant date, on the stock
exchange on which the shares of the Company are listed.
If the shares are listed on more than one stock exchange,
then, the stock exchange where there is highest trading
volume on the said date is considered.
2.6. Operating leases
Leases where the lessor effectively retains substantially
all the risks and rewards of ownership are classified as
operating leases. Payments made under operating lease
including escalations are recognised as an expense, on a
straight-line basis, over the lease term in the Standalone
Revenue/ Profit and Loss Account.
2.7. Borrowing costs
Borrowing costs are charged to the Standalone Profit
and Loss Account in the period in which these are
incurred.
2.8. Provision for doubtful debts
The Company regularly evaluates the probability of
recovery and provides for doubtful deposits, advances
and other receivables in accordance with the Company's
policy which is in line with the IRDAI regulations.
2.9. Benefits paid
Benefits paid comprise of policy benefits and claim
settlement costs, if any.
Death and rider claims are accounted for on receipt of
intimation. Survival, maturity and annuity benefits are
accounted when due. Withdrawals and surrenders
under non linked policies are accounted on the receipt of
intimation. Withdrawals and surrenders under unit linked
policies are accounted in the respective schemes when
the associated units are cancelled. Amount payable on
lapsed/discontinued policies are accounted for on expiry of
lock-in-period of these policies. Surrenders, withdrawals
and lapsation are disclosed at net of charges recoverable.
Claim settlement cost, legal & other fees form part of
claim cost wherever applicable.
Reinsurance claims are accounted for in the period in
which the claim is intimated and are netted off against
benefits paid.
Repudiated claims and other claims disputed before the
judicial authorities are provided for on prudent basis as
considered appropriate by the management.
2.10. Policy liability valuation
The actuarial liabilities, for all inforce policies and policies
where premiums are discontinued but a liability exists
as at the valuation date, are calculated in accordance
with the accepted actuarial practice, requirements of
Insurance Act, 1938, as amended from time to time,
regulations notified by the Insurance Regulatory and
Development Authority of India, relevant Guidance Notes,
Actuarial Practice Standards of the Institute of Actuaries
of India and regulations notified by International
Financial Services Centres Authority for business sourced
through ICICI Prudential Life Insurance Company Limited,
IFSC Insurance Office (Gandhinagar). The prescribed
method of valuation is the Gross Premium Valuation
(GPV). The reserve held represents the net present value
of benefits and expenses less premiums. The liability has
been computed such that together with future premium
payments and investment income, the insurer is expected
to meet all future claims (including bonus entitlements to
policyholders) and expenses, provided the experience
turns out to be in line with the current set of assumptions.
The following is the broad method of the valuation:
• The reserves are calculated on a per policy basis.
• Any negative reserves are zeroised, so that a policy
is not treated as an asset.
• The minimum value of reserves is the higher of
the guaranteed surrender value, non guaranteed
surrender value, and zero.
• For Linked business, unit liabilities are fully matched
and a non-unit reserve is also held which includes
provisions for any costs of guarantees provided
under the products.
• GPV under non-linked participating policies
have a reference to the asset share of policies at
valuation date.
The liabilities for group one-year renewable policies
are calculated on an unexpired risk premium basis.
For non-linked group savings products, account value
is held as liabilities.
Valuation parameters are set prudently and include a
margin for adverse deviation (MAD) as required under
APS7 issued by Institute of Actuaries of India.
2.11. Funds for Future Appropriations (FFA)
The Funds for Future Appropriations (FFA) represents
the surplus, which is not allocated to policyholders or
shareholders as at the Balance Sheet date.
Further, as per the Master Circular, discontinuance
charges deducted from policies discontinued during the
lock-in period shall be presented as a separate line item
under the head FFA for Linked in the Standalone Balance
Sheet until the exit of the policy from books due to expiry
of revival period or due to death of the life assured or
expiry of the lock-in period, as applicable.
2.12. Investments
Investments are made and accounted for in accordance
with the Insurance Act, 1938 as amended from time to
time, the Regulation, the Master Circular, International
Financial Services Centres Authority Regulations, 2022,
Investment Policy of the Company and various other
circulars/notifications issued by the IRDAI & IFSC in this
context from time to time.
Investments are recorded at cost on the date of purchase,
which includes brokerage and taxes, if any, but excludes
interest accrued as on the date of purchase. The cost for
Gift City funds also include IFSC turnover fees.
The Broken period interest paid/received is debited/
credited to income accrued on investments and deposits.
Bonus entitlements are recognised as investments on the
‘ex- bonus date'.
Rights entitlements are recognised as investments on the
‘ex-rights date'.
Any front end discount on investments is reduced from
the cost of such investments.
2.12.1. Classification
Investments maturing within twelve months from the
Balance Sheet date and investments made with the
specific intention to dispose them off within twelve
months from the Balance Sheet date are classified as
short-term investments.
Investments other than short-term investments are
classified as long-term investments.
2.12.2. Valuation - Other than Unit Linked Funds
Debt securities (including Government securities and
redeemable preference shares): All debt securities
including government securities and redeemable
preference shares are considered as ‘held to maturity'
and stated at historical cost, subject to amortisation of
premium or accretion of discount over the remaining
period to maturity on effective interest rate method.
Money Market Instruments:
Money market instruments like commercial paper,
certificate of deposits and treasury bills are valued at
historical cost, subject to accretion of discount over
the remaining period to maturity based on effective
interest rate method.
Equity shares, equity ETFs and Mutual funds:
Listed equity shares and equity exchange traded funds
(ETF) at the Balance Sheet date are stated at fair value
being the last quoted closing price on the National Stock
Exchange of India Limited (‘NSE') (in case the securities
are not listed on NSE, the last quoted closing price on BSE
Limited (‘BSE') is used). Unlisted equity shares are stated
at acquisition cost less impairment, if any. Equity shares
lent under the Securities Lending and Borrowing scheme
(SLB) continue to be recognised in the Standalone
Balance Sheet as the Company retains all the associated
risks and rewards of these securities.
Non-traded and thinly traded equity shares are valued at
last available price on NSE/BSE or the value derived using
valuation principle of net worth per share, whichever is
lower. Equity shares are classified as non-traded if the
same is not quoted on NSE/BSE for preceding 30 days
from the valuation date.
Mutual fund units are valued based on the previous days'
net asset values.
Unrealised gains/losses arising due to changes in the
fair value of listed equity shares and mutual fund units
are taken to the “Fair Value Change Account” in the
Standalone Balance Sheet.
Real estate - investment property:
Investment property is held to earn rental income or
for capital appreciation and is not occupied by the
Company. Investment property is initially valued at cost
including any directly attributable transaction costs.
Investment property is revalued at least once every three
years. The change in carrying amount of investment
property is taken to “Revaluation reserve” in the
Standalone Balance Sheet.
Venture funds units:
Investments in venture fund units are valued at
historical cost.
Reverse repo and tri-party repo:
Investments in reverse repo and tri-party repo are valued
at cost plus interest accrued.
Fixed deposits:
Fixed deposits with banks are valued at cost.
Impairment of Investments/Reversal of impairment:
The Company assesses at each Balance Sheet date
whether there is any evidence of impairment of any
investments. In case of impairment, the carrying value
of such investment is reduced to its fair value and the
impairment loss is recognised in the Standalone Revenue/
Profit and Loss Account after adjusting it with previously
recognised revaluation reserve/fair value change
account. However, at the Balance Sheet date if there is
any indication that a previously recognised impairment
loss no longer exists, then such loss is reversed and the
investment is restated to that extent.
2.12.3. Valuation - Unit Linked Funds
Debt securities (including Government securities):
Central and State government securities are valued as per
the valuation price provided by Credit Rating Information
Services of India Limited (CRISIL).
Debt securities other than government securities with a
residual maturity over 182 days are valued on a yield to
maturity basis, by using spreads over the benchmark rate
(based on the matrix released by CRISIL on daily basis) to
arrive at the yield for pricing the security.
Debt securities with a residual maturity up to 182 days
are valued at last valuation price plus the difference
between the redemption value and last valuation price,
based on straight line method over the remaining period
to maturity of instrument. (based on the matrix released
by the CRISIL).
Securities with call option are valued at the lower of
the value as obtained by valuing the security up to final
maturity date or the call option date. In case there are
multiple call options, the security is valued at the lowest
value obtained by valuing the security at various call
dates or up to the final maturity date (based on the
matrix released by the CRISIL).
Securities with put option are valued at the higher of
the value as obtained by valuing the security up to final
maturity date or the put option date. In case there are
multiple put options, the security is valued at the highest
value obtained by valuing the security at various put
dates or up to the final maturity date (based on the
matrix released by CRISIL).
The securities with both put and call option on the same
day would be deemed to mature on the put/call date and
would be valued on a yield to maturity basis, by using
spreads over the benchmark rate based on the matrix
released by CRISIL. Investments in reverse repo and tri¬
party repo are valued at cost plus interest accrued.
Money market instruments:
Money market instruments like commercial paper,
certificate of deposits and treasury bills are valued at
historical cost, subject to accretion of discount over
the period of maturity/holding based on effective
interest rate method.
Equity shares, redeemable preference shares, equity
ETFs and Mutual Funds:
Listed equity shares, redeemable preference shares
and equity ETF are valued at market value, being the
last quoted closing price on NSE (in case of securities
not listed on NSE, the last quoted closing price on BSE
is used). Equity shares lent under the Securities Lending
and Borrowing scheme (SLB) continue to be recognised
in the Standalone Balance Sheet as the Company retains
all the associated risks and rewards of these securities.
Non-traded and thinly traded equity shares are valued at
last available price on NSE/BSE or the value derived using
valuation principle of net worth per share, whichever is
lower. Equity shares are classified as non-traded if the
same is not quoted on NSE/BSE for preceding 30 days
from the valuation date.
ETF investments for Gift City are valued by identifying
the lowest available last quoted closing price from
all stock exchanges listed in the fund factsheet.
ETF investments are made in the currency in which the
policy is denominated.
Mutual fund units are valued based on previous day's
Net Asset Value.
Venture funds units:
Venture fund units are valued at the latest audited net
asset value of the respective fund.
Fixed deposits:
Fixed deposits with banks are valued at cost.
Unrealised gains and losses are recognised in the
Standalone Revenue Account as prescribed by the
Regulation.
2.12.4. Transfer of investments
Transfer of investments from Shareholders' account
to the Policyholders' account to meet the deficit in the
Policyholders' account is made at the cost price or market
price, whichever is lower. In case of debt securities
including money market instruments, all transfers
are made at the lower of the market price and the net
amortized cost.
The transfer of investments between unit liked funds is
done at the price as specified below:
a. In case of equity, preference shares, ETFs
and Government Securities market price of
the latest trade.
b. In case of securities mentioned in (a) if the trade
has not taken place on the day of transfer and for
all other securities not part of (a) previous day,
valuation price is used.
No transfer of investments is carried out between non-
linked policyholders' funds.
2.12.5. Provision for Non-Performing Assets (NPA)
An asset is classified as a NPA if the interest and/ or
instalment of principal remain overdue for more than
90 days at Balance Sheet date. Provision is made in the
Standalone Revenue Account and Standalone Profit and
Loss Account based on the guidelines prescribed by IRDAI.
2.13. Interest rate derivatives
Interest rate derivative contracts are used for hedging
of highly probable forecasted transactions on insurance
contracts and investment cash flows in life, pension
and annuity business. The Company follows hedge
accounting in accordance with the ‘Guidance Note
on Accounting for Derivative Contracts' issued by
the Institute of Chartered Accountants of India (ICAI)
and IRDAI Investment Master Circular as amended
from time to time.
At the inception of the hedge, the Company documents
the relationship between the hedging instrument and
the hedged item, the risk management objective and
strategy for undertaking the hedge, nature of risk
being hedged, identification of the instrument and the
hedged item and the methods used to assess the hedge
effectiveness. Hedge effectiveness is the extent to
which changes in the fair value or the cash flows of the
hedging instrument offset changes in the fair value or
the cash flows of the hedged item. Hedge effectiveness
is ascertained at the time of inception of the hedge and
on each reporting date.
The Forward Rate Agreement (FRA) contracts and Bond
Forwards are valued at the difference between the market
value of underlying bond at the spot reference yield
taken from the SEBI approved rating agency and present
value of the contracted forward price of underlying bond
including present value of intermediate coupon inflows
from valuation date till FRA/Bond Forward contract
settlement date, discounted by the INR-Overnight Index
Swap (OIS) rate curve.
The Company follows cash flow hedge accounting
for interest rate derivatives. The portion of the fair
value gain/loss on the interest rate derivative that
is determined to be an effective hedge is recognised
directly in ‘Credit/(Debit) Fair Value Change Account'
in the Standalone Balance Sheet under policyholders'
funds and the portion that gets determined as ineffective
hedge or ineffective portion of effective hedge, based on
the hedge effectiveness assessment is recognized in the
Standalone Revenue Account under head “Transfer/Gain
on revaluation/Change in fair value”.
The accumulated gains or losses that were recognised
directly in the ‘Credit/(Debit) Fair Value Change Account'
in the Standalone Balance Sheet are reclassified into
the Standalone Revenue Account, in the same period or
periods during which income on the investments acquired
from underlying forecasted cash flow is recognized in the
Standalone Revenue Account. In the event that all or any
portion of gain or loss, recognised directly in the ‘Credit/
(Debit) Fair Value Change Account' in the Standalone
Balance Sheet is not expected to be recovered in future
periods, the amount that is not expected to be recovered
is reclassified to the Standalone Revenue Account.
2.14. Loans
Loans are stated at historical cost less repayments,
subject to provision for impairment as per IRDA Regulation
and Master circular, if any. Loans are classified as short
term in case the maturity is less than twelve months.
Loans other than short term are classified as long term.
2.15. Fixed assets and Impairment
2.15.1. Tangible assets and depreciation
Tangible assets are stated at acquisition cost less
accumulated depreciation and impairment loss, if
any. Cost includes the purchase price net of any trade
discounts and rebates, any import duties, other taxes
(other than those subsequently recoverable from the
tax authorities), any cost directly attributable to bring
the asset to its working condition for its intended use
and other incidental expenses incurred up to that date.
Subsequent expenditure incurred on tangible assets is
expensed out except where such expenditure results in
an increase in future benefits from the existing assets
beyond its previously assessed standard of performance.
The useful life of various category of assets is as below:
Schedule II of the Companies Act 2013 specifies the
useful life of eight years for motor vehicles. As per
Company policy, the motor vehicle is transferred to the
employee on completion of five years or at written down
value (WDV) in case of separation of employee before
five years. Accordingly, the Company depreciates motor
vehicles over five years. Assets costing up to ' 5,000
are considered to be immaterial in value and hence fully
depreciated in the month of acquisition.
Depreciation is provided using the straight-line method
(‘SLM') prorated from the date of being ready to use, up
to the date of sale, based on estimated useful life for each
class of asset.
The useful life of tangible assets are periodically reviewed.
2.15.2. Intangibles
Intangible assets comprising software are stated at cost
less accumulated amortisation. Significant expenditure
on improvements to software are capitalised when it
is probable that such expenditure will enable the asset
to generate future economic benefits in excess of its
originally assessed standards of performance and such
expenditure can be measured and attributed to the asset
reliably. Subsequent capital expenditures are amortised
over the remaining useful life of the original software.
Software expenses are amortised using SLM over a
period of four years from the date of being ready to use.
The useful life of intangible assets are periodically reviewed.
2.15.3. Capital work in progress
Assets not ready for their intended use and other capital
work-in-progress are carried at cost, comprising direct
cost and related incidental expenses.
2.15.4. Impairment of assets
Management periodically assesses, using external and
internal sources, whether there is any indication that
an asset may be impaired. If any such indication exists,
an estimate of the recoverable amount of the asset
unit is made. Impairment occurs where the carrying
value of the asset exceeds the recoverable amount.
Recoverable amount is higher of an asset's net selling
price and its value in use. Value in use is the present value
of estimated future cash flows expected to arise from
the continuing use of the asset and its ultimate disposal.
If at the Balance Sheet date there is an indication that
a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset
is reflected at the recoverable amount, subject to a
maximum of depreciable historical cost.
2.16. Taxation
2.16.1. Direct taxes
Provision for income tax is made in accordance with the
provisions of Section 44 of the Income Tax Act, 1961
read with Rules contained in the First Schedule and
other relevant provisions of the Income Tax Act, 1961
as applicable to a company carrying on life insurance
business. Income tax expense comprises of current tax
(i.e. amount of tax for the year determined in accordance
with the Income Tax Act, 1961). Current tax is the amount
expected to be paid to the tax authorities after taking
credit for allowances and exemptions in accordance with
the Income Tax Act, 1961.
The Company calculates tax for the participating lines of
business in order to ensure that the expenses pertaining
to and identifiable with a particular line of business
are represented as such to enable a more appropriate
presentation of the standalone financial statements.
Accordingly, tax charge/credit on surplus/deficit arising
from the participating line of business is disclosed
separately in the Standalone Revenue Account.
2.16.2. Indirect taxes
Goods and Services Tax (GST) liability on services is set¬
off against the respective Input Tax Credits (ITC) available
from tax paid on input services for each state. GST ITC
pertaining to exempt revenue is reversed as per the GST
provisions. Unutilised eligible credits, if any, are carried
forward under “Advances and other assets” for future
set-off, where there is reasonable certainty of utilisation.
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