New India Assurance, a public sector general insurer, has recently received the largest-ever Goods and Services Tax (GST) demand notice among all insurers. The demand notice amounts to ₹2,379 crore.
The notice is based on Section 73(1) of the Central Goods and Services Tax (CGST) Act, 2017, which deals with non-payment or short payment of taxes. The notice was issued by the Directorate General of GST Intelligence, Pune Zonal Unit, and the company disclosed this information in an exchange filing.
New India Assurance clarified that the demand is concerned with industry-wide issues regarding the non-payment of GST on co-insurance premiums accepted as followers in co-insurance transactions.
In such cases, the leading insurer paid 100% GST on behalf of the follower. Furthermore, the demand also includes the failure to pay GST on reinsurance commissions received for reinsurance premiums ceded to different domestic and international reinsurance companies during the period from July 2017 to March 2022.
The company stated that it will be submitting an appropriate response to the show cause cum demand notice within the prescribed timelines, based on the advice of their tax consultants.
This move reflects a broader trend in the insurance sector, with insurers collectively facing GST demand notices totaling nearly ₹5,832 crores. These notices indicate increased scrutiny by tax authorities.
Prior to New India Assurance, Bajaj Allianz General Insurance received a show cause cum demand notice amounting to ₹1,010 crore from the Directorate General of GST Intelligence, Pune Zonal Unit.
HDFC Life also faced a tax demand of ₹942 crore, followed by ICICI Pru Life with ₹492 crore, LIC with ₹290 crore, and ICICI Lombard with a demand of ₹1,729 crore.
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As of the time of writing this update, New India Assurance’s shares were trading at 0.60 percent lower at ₹135.40 apiece on the BSE.
