a. Basis of preparation and presentation
The Financial Statements are prepared under the
historical cost convention unless otherwise stated,
on accrual basis in accordance with the generally
accepted accounting principles in India (Indian GAAP)
and in compliance with the Accounting Standards
notified under Section 133 of the Companies Act,
2013, further amended by Companies (Accounting
Standards) Amendment Rules, 2016, to the extent
applicable, the provisions of the Insurance Act, 1938,
as amended by the Insurance Laws (Amendment)
Act, 2015 and Insurance (Amendment) Act, 2021, the
Insurance Regulatory and Development Act, 1999, the
Insurance Regulatory and Development Authority of
India (Actuarial, Finance and Investment Functions
of Insurers) Regulations, 2024 ('the IRDAI AFI
Regulations 2024'), the Master Circular on Actuarial,
Finance and Investment Functions of Insurers dated
May 17, 2024 ('the IRDAI AFI Master Circular 2024')
and various circulars and notifications issued by the
IRDAI thereafter to the extent applicable.
The accounting policies used in preparation of
the financial statements are consistent with those
followed in the preparation of the Company's
financial statements for the previous year.
Use of estimates
The preparation of the financial statements in
conformity with generally accepted accounting
principles in India (Indian GAAP) requires the
management to make estimates and assumptions
that affect the reported amount of assets, liabilities,
revenues and expenses and disclosure of contingent
liabilities as of the date of the financial statements.
The reliance upon estimates and assumptions
used in the accompanying financial statements
are based on management's evaluation of the
relevant facts and circumstances as of the date
of the financial statements. Actual results may
differ from the estimates and assumptions used in
preparing the accompanying financial statements.
Difference between the actual and estimates are
recognised in the period in which the actual results
materialise or are known. Any revision to accounting
estimates is recognised prospectively in current and
future periods.
b. Revenue recognition
i. Premium Income
Premium of non-linked business is recognised
as income (net of Goods and Service Tax) when
due from policyholders. In respect of linked
business, premium income is recognised when
the associated units are allotted. In case of
variable insurance products (VIPs), premium
income is recognised on the date when the Policy
Account Value is credited. Uncollected premium
from lapsed policies is not recognised as income
until such policies are revived.
Top up premiums are considered as
single premium.
ii. Income from Linked funds
Income from linked funds which includes fund
management charges, policy administration
charges, mortality charges, etc. are recovered
from linked fund in accordance with terms
and conditions of policy and recognised
when recovered.
iii. Investment Income
Dividend income for quoted shares is recognised
on ex-dividend date, for non-quoted shares the
dividend is recognised when the right to receive
dividend is established.
Investment income on Alternate Investment
Funds (AIFs), Real Estate Investment Trusts
(REITs) Infrastructure Investment Trusts
(InvITs), are recognized as and when declared
by respective Fund/Trust.
Interest income is recognised on accrual basis.
Pre-acquisition interest paid/received to/from
counterparty on purchase/sale transaction
is debited/credited to interest accrued and
not due account. Accretion of discount and
amortisation of premium in respect of debt
securities are effected over the remaining term
of such instruments on the basis of the related
Yield-to-Maturity.
Realised gains and losses in respect of equity
securities and units of mutual funds, Equity
Exchange Traded funds (ETFs), Infrastructure
Investment Trusts (InvITs) and Real Estate
Investments Trusts (REITs) are calculated as
the difference between the net sales proceeds
and their cost. In respect of debt securities,
the realised gains and losses are calculated
as difference between net sales proceeds or
redemption proceeds and weighted average
amortised cost. Cost in respect of equity shares
and units of mutual funds, Equity Exchange
Traded funds (ETFs), Infrastructure Investment
Trusts (InvITs) and Real Estate Investments
Trusts (REITs) are computed using the weighted
average method.
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 straight-line basis.
iv. Income from loans
Interest income on loans is recognised on an
accrual basis. Loan processing fee is recognised
on receipt basis.
v. Rental Income
Rental income is recognised in the income
statement on the straight line basis over
the lease period.
. Reinsurance premium ceded
Premium ceded on reinsurance is accounted in
accordance with the terms of the reinsurance treaty
or in-principle arrangement with the re-insurer.
d. Liability for life policies (Policy liabilities)
The actuarial liability of all the life insurance policies
has been calculated by the Appointed Actuary in
accordance with the Insurance Act 1938, as amended
by the Insurance Laws (Amendment) Act, 2015 and
Insurance (Amendment) Act, 2021 and as per the
rules & regulations and circulars issued by IRDAI
from time to time and the relevant Guidance Notes
(GN) and / or Actuarial Practice Standards (APS)
issued by the Institute of Actuaries of India (IAI).
Non-linked business is reserved using a
prospective gross premium valuation method.
Mathematical reserves are calculated based on
future assumptions having regard to current
and future experience e.g. interest rates,
mortality and expenses.
For participating products, appropriate future bonus
assumptions have been made.
For Group-Par-Pension, the reserve is the
Accumulated Fund Value.
For Non-Linked - Individual fund-based products
and Non-Linked - Group fund-based products, the
policy liability in respect of savings portion is equal
to the fund value as on the date of valuation.
The unit liability in respect of Individual - Linked and
Group - Linked business has been considered as the
value of the units standing to the credit of the policy
holders, using the net asset value (NAV) as on the
valuation date.
The adequacy of charges under individual unit linked
policies to meet future expenses has been tested
and provision made as appropriate. Provision has
also been made for the cost of guarantee under unit
linked products offered with guarantee.
Variable Insurance Policies (VIPs) have also been
valued in a manner similar to the ULIP business by
considering liability as the policy account standing
to the credit of the policyholders plus additional
provisions for adequacy of charges to meet expenses.
e. Funds for future appropriation
Funds for future appropriation (FFA) account
represents funds, the allocation of which, either
to policyholders or to shareholders, has not been
determined at the Balance Sheet date.
f. Benefits paid
i. Claims cost consist of the policy benefit amounts
and claims settlement costs, where applicable.
ii. Claims by death and rider are accounted
when intimated. Intimations up to the end
of the period are considered for accounting
of such claims.
iii. Claims by maturity are accounted on the
policy maturity date.
iv. Survival and annuity benefit claims are
accounted when due.
v. Surrenders and withdrawals are accounted
as and when intimated. Benefits paid also
includes amount payable on lapsed policies
which are accounted for as and when due.
Surrenders, withdrawals and lapsation are
disclosed at net of charges recoverable.
vi. Repudiated/rejected claims disputed before
judicial authorities are provided for based
on management prudence considering the
facts and evidences available in respect
of such claims.
vii. Amount recoverable from re-insurers are
accounted for in the same period as the related
claim are intimated and are reduced from claims.
g. Acquisition costs
Acquisition costs such as commission, medical
fees, etc. are costs that are primarily related to the
acquisition of new and renewal insurance contracts.
The same are expensed in the period in which
they are incurred.
h. Fixed assets, intangibles and depreciation
Fixed assets
Fixed assets are stated at cost, less accumulated
depreciation and impairment, if any. Cost includes
the purchase price and any other cost which
can be directly attributed to bringing the asset
to its working condition for its intended use.
Subsequent expenditure incurred on existing
fixed assets is expensed out except where such
expenditure increases the future economic benefits
from the existing assets.
Intangibles
Intangible assets are stated at cost, less
accumulated amortisation and impairment, if
any. Expenditure incurred on application software
and their customisation or further development
is recognised as an intangible asset. The same is
capitalised under fixed assets if such expenditure
results in a benefit of enduring nature. Other software
expenses are expensed in the period in which they
are incurred. Subsequent expenditure incurred
on existing assets is expensed out except where
such expenditure increases the future economic
benefits from the existing assets, in which case the
expenditure is amortised over the remaining useful
life of the original asset.
Capital work in progress
Costs of assets as at the Balance sheet date not ready
for its intended use are disclosed as capital work-in¬
progress. Advances paid towards the acquisition of
fixed assets and intangibles at the Balance Sheet
date are disclosed as capital work-in-progress.
Depreciation/ amortisation
The Company is following straight line method of
depreciation provided on pro rata (monthly) basis
for period of use for the following type of assets
based on useful life as prescribed under Part "C" of
Schedule II to the Companies Act, 2013:
The residual value of the assets (other than building)
being very negligible is considered to be ?1 and the
residual value of the building is considered as 5% of
the cost of building as prescribed under Part C of
Schedule II of the Companies Act, 2013.
Software expenses are amortised over a maximum
period of 3 years.
Leasehold improvements are amortised equally over
the period of lease. Capital expenditure on individual
assets up to ' 1,000 are not capitalized and expensed
out as revenue expenditure.
Assets individually costing more than ?1,000 and
up to ?20,000 are fully depreciated in the month
of acquisition.
Depreciation is charged to Revenue and Profit &
Loss Account based on the available for use criteria.
i. Impairment of fixed assets
The carrying values of assets at each Balance Sheet
date are reviewed for impairment. If any indication
of such impairment exists, the recoverable amounts
of those assets are estimated and impairment is
recognised, if the carrying amount of those assets
exceeds their recoverable amount. The recoverable
amount is the greater of the net selling price and their
value in use. Value in use is arrived by discounting
the estimated future cash flows to their present
value based on an appropriate discount factor.
If at the Balance sheet date, there is an indication
that an impairment loss recognised for an asset in
earlier accounting periods is no longer required
or has decreased; reversal of impairment loss is
recognised. The recoverable amount is reassessed
and the asset is reflected at recoverable amount,
subject to a maximum of depreciable historical cost.
j. Foreign currency transactions
As per Accounting Standard 11 on The Effects of
Changes in Foreign Exchange Rates, transactions
denominated in foreign currencies are recorded
in INR at the exchange rate prevailing on the date
of transaction.
Monetary assets and liabilities denominated in
foreign currency as at the Balance Sheet
date are converted at the exchange rates
prevailing on that date.
Non-monetary items like fixed assets which are
recorded at historical cost are reported using the
exchange rate at the date of transaction.
Non-monetary items other than fixed assets, which
are recognised at fair value or other similar valuation
are reported using exchange rate at the date when
such value was determined.
Exchange differences either on settlement or on
translation are recognised in the Revenue Account
or Profit and Loss Account, as the case may be.
k. Investments
Investments are made and accounted in accordance
with the Insurance Act, 1938 as amended by
the Insurance Laws (Amendment) Act, 2015 and
Insurance (Amendment) Act, 2021, the IRDAI AFI
Regulations 2024, IRDAI AFI Master Circular 2024,
Investment Policy of the Company and various
other circulars/ notifications as issued by IRDAI
from time to time.
Investments are recorded on the trade date at cost,
which includes brokerage, security transaction tax,
education cess and stamp duty, wherever applicable
and excludes interest paid, if any, on purchase.
i. Classification of Investments
Investments maturing within twelve months
from balance sheet date and investments made
with the specific intention to dispose-off within
twelve months from balance sheet date shall be
classified as short-term investments.
Investments other than Short-term investments
are classified as "Long-term investments".
ii. Valuation - shareholders' investments and
non-linked policyholders' investments
Debt securities
Debt securities, including Government
securities and money market securities are
stated at historical cost subject to amortisation
of premium or accretion of discount over
a period of holding/maturity on yield to
maturity basis.
Investments in Fixed Deposits with banks and
Reverse Repo are valued at cost.
Equity, equity related instruments &
preference shares
Listed equity shares, equity related instruments
& preference shares are measured at fair value
on the Balance Sheet date. For the purpose
of determining fair value, the closing price at
primary exchange i.e. NSE is considered.
If NSE closing price is not available for
any security, then BSE closing price is
used for valuation.
Unlisted equity shares, equity related
instruments & preference shares are measured
at historical cost.
In case of Security Lending & Borrowing ('SLB'),
Equity Shares lent are valued as per valuation
policy for equity shares as mentioned above.
Bonus entitlements are recognised as
investments on the 'ex-bonus date'.
Rights entitlements are recognised as
investments on the 'ex-rights date'.
Additional Tier 1 (Basel III Compliant) Perpetual
Bonds classified under "Equity" as specified
by IRDAI, are valued at prices obtained from
Credit Rating Information Services of India
Limited ('CRISIL').
Unrealised gains or losses arising due to
change in the fair value of equity shares are
recognised in the Balance Sheet under "Fair
value change account".
On each balance sheet date, the Company
assess whether impairment of listed equity
securities has occurred. Any impairment loss
is recognised as an expense in the Revenue
or Profit and Loss Account to the extent of
the difference between the re-measured fair
value of the security or investment and its
weighted average cost as reduced by any
previous impairment loss recognised as an
expense in the Revenue or Profit and Loss
Account. Any reversal of impairment loss,
earlier recognised in Revenue or Profit and Loss
Account, is recognised in the Revenue or Profit
and Loss Account.
Mutual funds
Investments in mutual funds are valued at
the previous day's Net Asset Value (NAV).
Unrealised gains or losses arising due to
change in the fair value of mutual fund units
are recognised in the Balance Sheet under "Fair
value change account".
Alternative Investment Funds (AIFs)
Investments in Alternative Investment Funds
(AIFs) are valued at latest available NAV.
Unrealised gains or losses arising due to change
in the fair value of Alternative Investment Funds
(AIFs) are recognised in the Balance Sheet under
"Fair value change account".
Interest Rate Derivatives (IRDs)
Interest Rate Derivative (IRD) contracts
for hedging of highly probable forecasted
transactions on insurance contracts and
investment cash flows in life, pension and
annuity business, are accounted for in the
manner specified in accordance with 'Guidance
Note on Accounting for Derivative Contracts'
(Revised 2021) issued by the Institute of
Chartered Accountants of India (ICAI), IRDAI
Investment Master Circular as amended
from time to time.
The Company has well defined Board approved
interest rate risk hedging Policy and Process
document covering various aspects related
to functioning of the derivative transactions
undertaken to mitigate interest rate risk as
per the Interest rate risk hedging strategy.
At the inception of the hedge, the Company
designates and documents the relationship
between the hedging instrument and the
hedged item, the risk management objective,
strategy for undertaking the hedge and
the methods used to assess the hedge
effectiveness. Hedge effectiveness is the degree
to which changes in the fair value or cash flows
of the hedged item that are attributable to a
hedged risk are offset by changes in the fair
value or cash flows of the hedging instrument.
Hedge effectiveness is ascertained at the time
of inception of the hedge and periodically
thereafter at Balance Sheet date.
Forward Rate Agreement ("FRA") and Bond
Forward Agreement ("BFA") is a forward contract
to hedge the risk of movements in interest rates.
In FRA and BFA contract, the Company fixes the
yield on the government bond for the period
till the maturity of the contract. The Company
enters into forward contract to hedge interest
rate risk on forecasted transactions: a)
Reinvestment of maturity proceeds of existing
fixed income investments; b) Investment of
interest income receivable; and c) Expected
policy premium income receivable on insurance
contracts which are already underwritten in
Life, Pension & Annuity business.
The Company follows "hedge accounting"
for accounting of all Interest rate derivative
financial instruments as per Guidance Note
on Accounting for Derivative Contracts
issued by ICAI.
The Forward contract is 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
contracted forward price of underlying bond
including present value of intermediate coupon
inflows from valuation date till forward contract
settlement date, at applicable INR-OIS rate
curve. The fair valuation or Mark-to-market
valuation of the derivative financial instruments
is done independently by both the parties i.e.
the Company and the counter party. The counter
party (bank) valuation is considered for margin
settlement as the counter party (bank) is the
valuation agent as per forward rate agreement.
Hedging instruments are initially recognised
at fair value and are re-measured at fair value
at subsequent reporting dates. The effective
portion of fair value gain / loss on the interest
rate derivative that is determined to be
an effective hedge is recognised in equity
account i.e. "Hedge Fluctuation Reserve" or
"HFR" under the head 'Credit/(Debit) Fair Value
Change Account'' in the Balance Sheet and the
ineffective portion of the change in fair value
of such derivative instruments is recognised in
the Revenue Account or Profit and Loss account
in the period in which they arise. The fair value
gain / loss on the interest rate derivative that
is determined to be an ineffective hedge is
recognised in the Revenue Account or Profit and
Loss account in the period in which they arise.
The accumulated gains or losses that were
recognised in the Hedge Fluctuation Reserve are
reclassified into Revenue Account or Profit and
Loss account, in the same period during which
the income from investments acquired from
underlying forecasted cash flow is recognized in
the Revenue Account or Profit and Loss Account.
Hedge accounting is discontinued when the
hedging instrument is terminated or it becomes
probable that the expected forecast transaction
will no longer occur or the risk management
objective is changed or no longer expected
to be met. On such termination, accumulated
gains or losses that were recognised in the
Hedge Fluctuation Reserve are reclassified into
Revenue Account or Profit and Loss Account.
Costs associated with derivative contracts are
considered as at a point in time cost.
Real Estate Investment Trusts (REITs)/
Infrastructure Investments Trusts (InvITs)
The Investment in Units of REITs / InvITs are
valued at Market Value (last quoted price should
not be later than 30 days). For the purpose of
determining market value, the closing price at
primary exchange i.e. NSE is considered. If NSE
closing price is not available for any security,
then BSE closing price is used for valuation.
Where market quote is not available for the
last 30 days, the units are valued as per the
latest NAV (not more than 6 months old) of the
units published by the trust. Unrealised gains
or losses arising due to change in the fair
value of Real Estate Investment Trust (REITs)/
Infrastructure Investments Trusts (InvITs) are
recognised in the Balance Sheet under "Fair
value change account".
iii. Valuation - Linked business
Debt securities
Debt securities including Government securities
with remaining maturity of more than one year
are valued at prices obtained from Credit Rating
Information Services of India Limited ('CRISIL').
Debt securities including government securities
with remaining maturity of less than one year
are valued on yield to maturity basis, where
yield is derived using market price provided by
CRISIL on the day when security is classified
as short term. If security is purchased during
its short term tenor, it is valued at amortized
cost using yield to maturity method. In case of
securities with options, earliest Call Option /
Put Option date will be taken as maturity date
for this purpose.
Money market securities are valued at historical
cost subject to amortisation of premium or
accretion of discount on yield to maturity basis.
Investments in Fixed Deposits with banks and
Reverse Repo are valued at cost.
Equity, equity related instruments &
preference shares
Listed equity shares, equity related instruments
& preference shares are measured at fair value
on the Balance Sheet date. For the purpose of
determining fair value, closing price at primary
exchange i.e. NSE is considered.
If NSE closing price is not available for
any security, then BSE closing price is
used for valuation.
Unlisted equity shares, equity related
instruments & preference shares are measured
at historical cost.
In case of Security Lending & Borrowing (SLB),
Equity Shares lent are valued as per valuation
policy for equity shares as mentioned above.
Additional Tier 1 (Basel III Compliant) Perpetual
Bonds classified under "Equity" as specified by
IRDAI, are valued at prices obtained from CRISIL.
Unrealised gains or losses arising due to
change in the fair value are recognised in the
Revenue Account.
Mutual funds
Investments in mutual funds are valued at
the previous day's Net Asset Value (NAV).
Unrealised gains or losses arising due to
change in the fair value of mutual fund units are
recognised in the Revenue Account.
Real Estate Investment Trusts (REITs)/
Infrastructure Investments Trusts (lnvIT)
The Investment in Units of REITs / InvITs are
valued at Market Value (last quoted price should
not be later than 30 days). For the purpose of
determining market value, the closing price at
primary exchange i.e. NSE is considered. If NSE
closing price is not available for any security,
then BSE closing price is used for valuation.
Where market quote is not available for the last
30 days, the units are valued as per the latest
NAV (not more than 6 months old) of the units
published by the trust. Unrealised gains or losses
arising due to change in the fair value of REITs
units are recognised in the Revenue Account.
iv. Transfer of investments
a. Transfer of investments from
Shareholders' fund to Policyholders' fund
In the case of deficit in Revenue Account,
transfer of securities from shareholders to
policyholders is done as below:
(i) Debt securities are transferred at
lower of net amortised cost or market
value on the date of transfer;
(ii) Equity securities are transferred at
lower of cost or market value on the
date of transfer.
b. Transfer of investments from
Policyholders' fund to Shareholders' fund
In the case of surplus in Revenue Account,
transfer of securities from policyholders' to
shareholders' is done as below:
(i) Debt securities are transferred at net
amortised cost;
(ii) Equity securities are transferred at
market value on the date of transfer.
c. Transfer of investments between non-
linked Policyholders' funds
No transfer of investments is carried out
between non-linked policyholders' funds.
d. Transfer of investments between unit-
linked funds
In case of unit linked fund, inter schemes
transfers of equity, preference shares,
ETFs and Government Securities are made
at prevailing market price at the time of
transfer. In case, if the trade has not taken
place on the day of transfer, the transfer
of investments is accounted at previous
day valuation price as per IRDAI AFI
Regulations 2024.
For all other securities, transfer of
investments is accounted at previous
day valuation price as per IRDAI AFI
Master Circular 2024.
v. Impairment of Investments
On each balance sheet date, the Company
assesses whether there is any indication of
impairment of investments or reversal of
impairment loss recognised in prior periods.
Any impairment loss is recognised as an
expense in the Revenue or Profit and Loss
Account to the extent of the difference between
the re-measured fair value of the security or
investment and its weighted average cost
as reduced by any previous impairment loss
recognised as an expense in the Revenue
or Profit and Loss Account. Any reversal of
impairment loss, earlier recognised in Revenue
or Profit and Loss Account, is recognised in the
Revenue or Profit and Loss Account.
vi. Provision for Non-Performing Assets (NPAs)
All assets where the interest and/or principal
repayment remain overdue for more than 90
days at the Balance Sheet date are classified
as NPA and provided for in accordance
with the requirement of applicable IRDAI
Regulations/circulars.
l. Loans
Investments in Loans are stated at historical cost,
less repayments, subject to provision for impairment
losses & non-performing asset (NPA) provision, if any.
m. Provision for Standard Assets
In accordance with the IRDAI valuation guidelines
on 'Income Recognition, Asset Classification,
Provisioning and Other related matters' vide the
IRDAI AFI Master Circular 2024, adequate provisions
are made for estimated loss arising on account
from/under recovery of loans and advances (other
than loans and advances granted against insurance
policies issued by the insurer) outstanding at the
Balance Sheet date in respect of standard assets.
n. Employee benefits
(i) Post-employment benefit
Defined benefit plans
Provident Fund
The Company makes contribution towards
provident fund, a defined benefit retirement
plan. The provident fund is administered by
the trustees of the SBI Life Insurance Company
Limited Employees PF Trust. The contribution
paid or payable under the schemes is charged
to the Revenue Account during the period
in which the employee renders the related
service. Further, an actuarial valuation is
conducted annually by an independent actuary
to recognise the deficiency, if any, in the interest
payable on the contributions as compared to
the interest liability as per the statutory rate.
Gratuity
The Company has incorporated a gratuity
trust. The Company makes contribution to a
Gratuity Fund administered by trustees of SBI
Life Insurance Company Limited Employees
Gratuity Fund. The plan provides a lump sum
payment to vested employees at retirement
or termination of employment based on the
respective employee's salary and the years of
employment with the Company.
The Company accounts for the liability for future
gratuity benefits in accordance with Accounting
Standard - 15 (Revised). The net present value of
the Company's obligation towards the same is
actuarially determined based on the projected
unit credit method as at the Balance Sheet date.
Actuarial gains and losses are recognised in the
Revenue Account.
COVID Ex-gratia
The Company accrues liability for Employees
COVID Ex-gratia Scheme in accordance with
Accounting Standard - 15 (Revised) 'Employee
Benefits' issued by ICAI. The Net Present Value
(NPV) of the Company's obligation towards the
Employees COVID Ex-gratia Scheme, which is a
defined benefit plan, is actuarially determined
based on the Projected Unit Credit Method
(PUCM) as at the Balance Sheet date.
(ii) Other long-term employee benefits
Compensated Absences and Long-Term
Service Awards
Compensated absences which are not expected
to occur within twelve months after the end of
the period in which the employee renders the
related services are recognised as a liability
at the present value of the defined benefit
obligation at the Balance Sheet date.
Long Term Service Awards are recognised as
a liability at the present value of the defined
benefit obligation at the Balance Sheet date.
The Company accrues the liability for
compensated absences and long-term service
awards in accordance with Accounting Standard
- 15 (Revised) on Employee Benefits. The net
present value of the Company's obligation is
determined based on the projected unit credit
method as at the Balance Sheet date.
(iii) Short-term employee benefits
The undiscounted amount of short-term
employee benefits expected to be paid for the
services rendered by employees is recognised
during the period when the employees
renders the service. These benefits include
salaries and bonuses, short term compensated
absences, premium for staff medical insurance
(hospitalization), premium for employee group
term insurance scheme etc.
(iv) Employee share based payments
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 Employee
Share based Payments (Revised 2020), issued
by the Institute of Chartered Accountants of
India (ICAI). The intrinsic value is measured as
the excess, if any, of the fair market price of the
underlying stock over the exercise price on the
grant date. The intrinsic value of options, if any,
at the grant date is 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 which records the highest trading
volume on the date, immediately prior to the
grant date is considered.
i. Accounting for Leases
(i) Operating Lease
Where the Company is the lessee
Leases where the lessor effectively retains
substantially all the risks and benefits of
ownership over the lease term are classified as
operating leases. Operating lease rentals are
recognised as an expense over the lease period
on a straight line basis.
Where the Company is the lessor
Assets subject to operating leases are included
in fixed assets. Lease income is recognised in
the Profit and Loss Account on a straight-line
basis over the lease term. Costs, including
depreciation are recognised as expense in the
Profit and Loss Account.
(ii) Finance Lease
Leases under which the Company assumes
substantially all the risk and rewards of
ownership of the asset are classified as
finance leases. Such leased asset acquired are
capitalised at fair value of the asset or present
value of the minimum lease rental payments at
the inception of the lease, whichever is lower.
p. Taxation
Direct Taxes
Provision for current income tax, if any, is made
on an accrual basis after taking credit for all
allowances and exemptions in accordance with the
Income Tax Act, 1961.
Deferred income tax is recognised for future tax
consequences attributable to timing differences
between income as determined by the financial
statements and the recognition for tax purposes.
The effect of deferred tax asset or liability of a
change in the tax rates are recognised using the
tax rates and tax laws that have been enacted or
substantively enacted by the Balance Sheet date.
Deferred tax assets are recognised only to the extent
that there is a virtual certainty that sufficient future
taxable income will be available against which such
deferred tax assets can be realised. Deferred tax
assets or liabilities are reviewed as at each Balance
Sheet date and written down or written up to reflect
the amount that is reasonably or virtually certain
to be realised.
Indirect Taxes
Goods and Service Tax (GST) liability on output service
is set-off against the input tax credits available
from GST paid on input services. Unutilised credits,
if any, are carried forward under "Advances and
other assets" for future set off and are deferred
for recognition to the extent there is reasonable
certainty that the assets can be realised in future.
q. Segmental reporting
As per Accounting Standard 17 on "Segmental
Reporting" read with the IRDAI AFI Regulations 2024,
the Company has classified and disclosed segmental
information in to participating, non-participating
and linked businesses, which are further segmented
into Individual life, group, health, pension,
variable and annuity.
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