A central law enforcement agency responsible for preventing Goods and Services Tax (GST) revenue leakage has issued ICICI Lombard a show cause and demand notice for allegedly evading Rs 1,728.9 crore in taxes over five years, from July 2017 to March 2022. The notice pertains to non-payment of GST on co-insurance premiums accepted as a follower in coinsurance transactions and on reinsurance commissions accepted on reinsurance premiums ceded to various Indian and foreign reinsurance companies.
ICICI Lombard, in a stock exchange filing, stated that this notice is part of an industry-wide issue. Following advice from its tax advisors, the company plans to submit an appropriate response within the specified deadlines.
The Directorate General of GST Intelligence (DGGI) has been investigating 30 insurance companies for alleged GST evasion, detecting input tax credit discrepancies amounting to Rs 3,500 crore so far. The investigation into 15 companies has been completed, with notices to the remaining 15 to be issued soon.
In August, ICICI Lombard received another show cause notice from DGGI demanding Rs 273 crore in taxes related to GST on salvage and ineligible tax credit associated with motor insurance claims. In response, the company deposited Rs 104 crore under protest, without accepting liability.
Additionally, ICICI Lombard disclosed that it received a notice of demand for Rs 94.14 crore dated May 29, 2023.
Other insurance companies have also been implicated. In June, HDFC Life received a show cause notice demanding Rs 942 crore for the period from July 2017 to FY22, and ICICI Prudential Life Insurance received a notice for nearly Rs 492 crore for the same period. Both companies have made partial deposits under protest, with HDFC Life depositing Rs 50 crore and ICICI Prudential Life Insurance depositing Rs 190 crore.
ET reported on September 29, 2022, about the investigations into potential GST input tax credit violations by insurers and similar probes by the Income Tax Department on January 24. ICICI Lombard received the current show cause notice on September 27, and stated it will file an appropriate response within the prescribed timelines based on advisor recommendations.
