Mumbai, February 1, 2025
The New India Assurance Company Ltd. (NSE: NIACL, BSE: 540769) has received an order from the Additional Commissioner, CGST & Central Excise, Palghar Commissionerate, confirming a Goods and Services Tax (GST) demand of
₹849.45 crore, including
interest and penalties.
Tax Dispute Details
The demand pertains to the company's alleged
non-payment of Integrated GST (IGST) on the
supply of Group Health Insurance services provided to
Special Economic Zone (SEZ) units. According to the tax authorities, the insurance services were
actually consumed by employees and their family members rather than the SEZ units themselves, which would have qualified for tax exemptions.
- Tax Period: July 1, 2017 – March 31, 2024
- Tax Authority Involved: Directorate General of Goods & Services Tax Intelligence (DGGI), Mumbai Zonal Unit
- Relevant GST Sections:
- Section 74(1) of the CGST Act, 2017
- Section 20 of the IGST Act, 2017
Company’s Response
The insurer had earlier disclosed the receipt of a
Show Cause cum Demand Notice from DGGI on
August 5, 2024, disputing the IGST liability. The company has now confirmed that it intends to
challenge the order before the appropriate adjudicating authority based on legal advice.
"The order refers to industry-wide issues, and based on the advice of tax consultants, we will be filing an appropriate response within the prescribed timelines," NIACL stated in its regulatory filing.
Financial Implications
The company has indicated that it will assess the
₹849.45 crore demand, plus interest and penalties, for disclosure as a
contingent liability in its financial statements. The final financial impact will depend on the outcome of the appeal.
Industry Perspective
This development comes amid heightened scrutiny of
insurance and financial services provided to SEZs, a segment historically enjoying tax exemptions. If the demand is upheld, it could set a precedent for similar tax liabilities across the insurance sector.
Market Reaction & Outlook
Investors and analysts will closely monitor NIACL’s next legal course of action and its potential financial repercussions. The company has assured stakeholders that
it is actively working on a resolution.