LIC Hit with Rs. 605 Crore GST Demand for FY20

Life Insurance Corporation of India (LIC), the country’s largest insurer, has been hit with a major Goods and Services Tax (GST) demand order amounting to Rs.605.58 crore for the financial year 2019-20. The order, issued by the Deputy Commissioner of State Tax in Mumbai, includes a GST amount of Rs 294.43 crore, interest of Rs 281.70 crore, and a penalty of Rs 29.44 crore.

What’s the Story?

The demand revolves around issues related to the incorrect availment and partial reversal of Input Tax Credit (ITC), along with interest due to late payments. LIC, in its recent filing, noted that this order, which comes from Maharashtra tax authorities, can be appealed before the Joint Commissioner of State Tax (Appeals) in Mumbai. Despite the hefty sum, LIC has assured that this won’t significantly impact its financials, operations, or overall activities.

Adding to the mix, LIC received another GST demand just a day earlier from Bengaluru’s DGSTO-5 office, totaling Rs.38.09 crore which includes Rs.1.83 crore for GST, Rs.1.79 crore in interest, and a penalty of Rs.18.33 lakh. 

Not the First Time 

This isn’t the first time LIC has found itself under the tax authorities’ focus. Back in March 2024, LIC faced a GST demand from the Additional Commissioner of Central GST and Central Excise in Jamshedpur, totaling about Rs.178 crore. And in July 2024, LIC appealed against another massive GST demand of Rs.794 crore for FY19.

LIC’s Financials

Despite these challenges, LIC’s financial health remains solid. In Q1FY25, LIC reported a 9% rise in net profit to Rs.10,544 crore. Total income increased to Rs.2,10,910 crore from Rs.1,88,749 crore. First-year premiums grew to Rs.7,470 crore, while renewal premiums rose to Rs.56,429 crore. Gross non-performing assets improved to 1.95% from 2.48%.

Conclusion: Wrapping it up, even with the hefty GST demands, LIC’s financial performance shows it’s on solid ground. The company’s ability to handle these tax issues without major disruptions suggests it’s in a strong position to navigate regulatory bumps along the way now.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.