The company has already deposited an amount of Rs 104 crore as GST under protest, without accepting any liability in this regard and would be filing its response against the notice within the prescribed timelines
New Delhi:
ICICI Lombard General Insurance has become the first general insurer in the industry to receive a show cause notice (SCN) on Tuesday from directorate general of GST Intelligence, alleging a tax demand of around Rs 273,44 crore under the Central Goods and Services Tax Act, 2017 along with interest and penalty.
The matter largely relates to an industry wide issue on applicability of GST on salvage adjusted and ineligible Input Tax Credit, on motor claims settled, the company said in a regulatory filing.
The company has already deposited an amount of Rs 104 crore under protest, without accepting any liability in this regard and such amount deposited has been disclosed by way of notes to Contingent Liability in the Financial Statements of the company for the FY 22-23, said the company.
“We would be filing its response against the said SCN within the prescribed timelines,” said the company.
Shares of ICICI Lombard General Insurance closed 1.70 per cent lower at Rs 1,391.60 apiece on the BSE on Wednesday.
Earlier, GST authorities have served similar notices to HDFC Life and ICICI Pru Life insurance and it is expected that more insurers will be served notices soon.
The matter relates to the claiming of input tax credit against supply of services, which the Directorate of Goods and Services Tax (GST) Intelligence (DGGI) believes are ineligible for such claims.
The D-G of GST Intelligence is currently probing large number of insurance companies across life, general and intermediary segments, and several of their channel partners over fake invoices and wrongly claimed input tax credit(ITC).
The DGGI had launched a probe into insurance companies in 2022 after it found that some of these firms had wrongfully availed input tax credit(ITC) on the basis of invoices issued by several intermediaries for providing services of advertising, marketing, brand activation even when no such services had actually been provided. In the absence of any underlying supply, the ITC was not permissible under the GST law.
This was done by insurers to circumvent IRDAI regulations that mandated only nominal commissions to corporate agents. The insurers obtained invoices from these intermediaries for supply of services of advertising, web marketing to transfer higher than permitted commission to NBFCs working as corporate agents.
The total amount involved in the fake invoices and wrongly claimed ITC exceeds Rs 25,000 crore, says industry sources and if the tax liability over that is included, the total amount that may be demanded by GST and income tax authorities, will be much higher, sources said.
For matters involving mass scale frauds, which have haunted some of the reputed players of the Indian insurance industry for sometime now, the investigative wing has recorded the statements of all insurers and respective intermediaries.
It is preparing to issue show cause notices for some players in the insurance industry while some have already been served the notices.