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GST Revenue Leak: ICICI Lombard faces ₹1,728.9 crore tax demand amid ongoing investigations

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A central law enforcement agency tasked with preventing the leakage of Goods and Services Tax (GST) revenue has served ICICI Lombard with a show cause and demand notice for allegedly not paying Rs 1,728.9 crore worth of tax for five years from July 2017 till March 2022.

“The alleged demand and the impugned Show Cause Cum Demand Notice pertain to non-payment of GST on the co-insurance premium accepted as follower in case of coinsurance transactions and non-payment of GST on re-insurance commission accepted on the reinsurance premium ceded to various Indian and Foreign reinsurance companies during the period July 2017 to March 2022,” the general insurance company said in a stock exchange filing.

The notice was served on September 27.

ICICI Lombard said the show cause cum demand notice pertains to industry-wide concerns, and following advice from its tax advisors, the company will submit a suitable response within the specified deadlines.

ET had reported in July that the Directorate General of GST Intelligence, which was investigating 30 insurance companies for alleged GST evasion, had completed the investigation into 15 of them, detecting input tax credit discrepancies to the tune of Rs 3,500 crore so far. It is in the process of sending notices to the remaining 15, people aware of the details told ET in July. The agency had said it ll finish the probe by November.

InTax

In August, ICICI Lombard had received a show-cause notice from the Directorate General of GST Intelligence that has demanded Rs 273 crore in taxes. The demand of Rs 273 crore pertained to GST associated with salvage and ineligible tax credit related to motor insurance claims, as detailed in a stock exchange notification. In response, ICICI Lombard has deposited Rs 104 crore, with a protest, without accepting any responsibility in this matter.

ICICI Lombard had also announced that it has received a notice of demand dated May 29, 2023, amounting to Rs 94.14 crore.

ET was first to report on September 29, 2022, about investigations into potential GST input tax credit violations by insurers, and on January 24, about similar probes by the Income Tax Department. HDFC Life on June 23 said it had received a show cause notice from DGGI demanding Rs 942 crore tax for the July 2017 to FY22 period.

ICICI Prudential Life Insurance had also received notice for an alleged GST liability of nearly Rs 492 crore.

While the companies plan to take legal action, HDFC Life had deposited Rs 50 crore, and ICICI Prudential Life Insurance deposited Rs 190 crore during the inquiry without accepting liability.

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