Bajaj Allianz General Insurance Company Limited, a prominent player in the insurance sector, has been served with a substantial Goods and Services Tax (GST) demand notice amounting to ₹1,010 crore. The notice, received from the Directorate of GST Intelligence, is related to alleged non-payment of GST on co-insurance and re-insurance premiums. This development was confirmed by Bajaj Finserv in its stock exchange filing on Tuesday.
The company is expected to provide an appropriate response to the Show Cause Cum Demand Notice within the stipulated timelines.
In its filing with the Bombay Stock Exchange (BSE), Bajaj Finserv stated, "Bajaj Allianz General Insurance Company Limited ("BAGIC"), an unlisted material subsidiary of the Company, has received a Show Cause Cum Demand Notice from the Directorate General of GST Intelligence, Pune Zonal Unit, under Section 73(1) of the Central Goods and Services Tax Act, 2017 ("the Act"), on 29 September 2023 alleging a tax demand of Rs. 1,010,05,80,540/."
The show cause notice pertains to the non-payment of GST on specific matters dating back to the period between July 2017 and March 2022. The issue of GST payment on these two types of premiums, co-insurance, and re-insurance, has been a contentious point of discussion between the government and various insurance companies. It's worth noting that several other insurance firms have also received similar notices from the GST Intelligence Directorate.
In a related development, the Directorate General of GST Intelligence (DGGI) issued a demand notice amounting to ₹1,728 crore to ICICI Lombard General Insurance. This notice, received by ICICI Lombard, is also connected to non-payment of tax on certain supplies made between July 2017 and March 2022. The notice specifically underscores the non-payment of GST on co-insurance and re-insurance premiums.
ICICI Lombard confirmed this in its BSE filing on September 27, stating, "The alleged demand and the impugned show cause cum demand notice pertains to non-payment of GST on the co-insurance premium accepted as follower in case of co-insurance transactions and non-payment of GST on reinsurance commission accepted on the reinsurance premium ceded to various Indian and foreign reinsurance companies during the period July 2017 to March 2022."
These developments highlight the increasing scrutiny and regulatory focus on GST compliance in the insurance sector, with both Bajaj Allianz and ICICI Lombard now navigating the complexities of these tax-related challenges.
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