Leading private sector life insurer HDFC Life Insurance on Friday said the company received a Goods and Services Tax (GST) demand notice of Rs 942 crore for the period between July 2017 to March 2022.
HDFC Life Insurance is likely to legally challenge the demand notice before CESTAT (Customs Excise and Service Tax Appellate Tribunal), sources told CNBC-TV18.
“…we would like to disclose that HDFC Life Insurance Company Ltd has received a show cause cum demand notice from the Directorate General of GST Intelligence, Mumbai Zonal Unit asking the company to show cause why a tax of Rs 942,18,46,028 pertaining to the period July 2017 to FY22, should not be demanded from the company,” it said in an exchange filing.
Further, HDFC Life said the matter relates to the claiming of an Input Tax Credit against the supply of services, which the authority believes are ineligible for such claims. The company has been advised by its legal and tax counsel that it has a good contestable case.
“This is an industry-wide issue and the company will be taking appropriate steps in due course to reply to the show cause notice and contest the matter. It may be noted that Rs 250 crore has been deposited under protest with the Authority in this matter in the past,” HDFC Life added.
Last September, the Mumbai unit of the Directorate General of GST Intelligence (DGGI) said that an ITC of Rs 824 crore had been availed by 16 insurance companies on the basis of fake invoices. Out of this, insurers had voluntarily paid Rs 217 crore after the DGGI investigation.
DGGI investigations revealed that these insurers were actually paying commissions beyond IRDAI's permissible limit to their corporate agents in the garb of expenses related to marketing and brand activation. As per the GST law, such availing of the ITC is not permissible as the supply of said service did not actually take place.
Investigations revealed that these insurers were actually paying commissions beyond IRDAI’s permissible limit to their corporate agents in the garb of expenses related to marketing and brand activation.
The norms with regard to payment of commission to agents and intermediaries have been modified by the insurance regulator IRDAI with effect from April 1, 2023. The modified norms prescribe an overall limit for management expenses, including commission-related expenditures, that an insurer can incur.
Source: CNBC TV18
https://www.cnbctv18.com/business/companies/hdfc-life-insurance-receives-gst-demand-notice-of-rs-942-crore-17027581.htm
https://www.cnbctv18.com/business/companies/hdfc-life-insurance-receives-gst-demand-notice-of-rs-942-crore-17027581.htm
