Taxation of life insurance proceeds: new rules compute taxable income on policy payouts by deducting non deducted premiums. Rules compute taxable income on life insurance policy receipts as A - B for the first year of receipt and C - D for subsequent years, where A/C are sums received and B/D are aggregates of premiums paid up to receipt date that have not been claimed as deductions nor already accounted for in prior years. The provision excludes unit linked insurance policy receipts and amounts specified as income under clause (iv) of sub section (2) of section 56 from the definition of sums received.