The Life Insurance Corporation of India (LIC) is facing mounting tax scrutiny after receiving two Goods and Services Tax (GST) demand notices in quick succession, totaling Rs. 537.16 crore.
The latest demand, amounting to Rs. 479.88 crore, was issued by the Deputy Commissioner of State Tax, Mumbai, for the financial year 2020-21. It cites alleged wrongful availment and short reversal of input tax credit (ITC), interest on delayed payments, and short payment of tax liabilities.
Read More: LIC Receives Rs. 57.28 Crore GST Demand Notice for Excess ITC Availment
This comes just days after LIC received another GST demand of Rs. 57.28 crore from the Delhi tax authorities on February 26 for excess ITC claims in the same financial year. The earlier notice, issued by the Assistant Commissioner, Ward 206, Zone 11, Delhi, included Rs. 31.04 crore in GST, Rs. 23.13 crore in interest, and Rs. 3.10 crore in penalties.
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LIC has assured stakeholders that both tax demands are appealable and will not have a material impact on its financial position or operations.
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“The financial impact of the demands is limited to the GST, interest, and penalty amounts. There is no material impact on the financials, operations, or other activities of the Corporation,” LIC stated in a regulatory filing.
The insurer plans to challenge the Mumbai demand before the Joint Commissioner of State Tax (Appeals), Mumbai, and the Delhi order will be challenged before the Commissioner (Appeals), Delhi.
The outcome of LIC’s appeals will determine the actual financial impact. If successful, the liabilities could be significantly reduced or nullified. However, if the challenges fail, LIC may have to make provisions for the tax liabilities, potentially affecting its profitability in the coming quarters.
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