The Life Insurance Corporation of India (LIC) disclosed to the exchanges that it has received a tax notice amounting to INR 806 crore from the Deputy Commissioner of State Tax, Mumbai. The notice pertains to the non-reversal of input tax credit availed from reinsurance during the financial year 2017-18, as indicated in the exchange filing.
The tax notice breaks down as follows: the goods and services tax (GST) charged is INR 365 crore, accompanied by a penalty of INR 404.77 crore and an interest charge of INR 36.5 crore, totaling nearly INR 806 crore. Despite the substantial amount, the filing reassures stakeholders that the order’s impact on the company’s financials will not be material.
This development follows LIC’s appeal to the Bombay High Court in October 2023 against the Income Tax Appellate Tribunal’s decision to grant relief in two tax disputes amounting to INR 4,993 crore. The regulatory filing outlines various violations, including non-reversal of input tax credit, reversal of ITC availed from reinsurance, interest on delayed payment with GSTR-3B, interest on advance received, and discrepancies in reverse charge mechanism liability between GSTR-9/3B and suppliers’ disclosures in GSTR-1.
In response to the tax notice, LIC plans to file an appeal before the Commissioner (Appeals), Mumbai, within the stipulated timelines. The insurer underscores that the GST demand will not significantly impact its financials, operations, or other activities.
While this is not the first time LIC has faced a GST-related demand notice, the current amount is notably substantial, according to sources. The company’s proactive approach in filing appeals and providing reassurances signals its commitment to addressing regulatory challenges and maintaining stability in its financial landscape.
