LIC Says It Has Got GST Notice Of Rs 37,000 For Paying Taxes At Lower Rate

News: Recent news has disclosed that the Life Insurance Corporation of India (LIC) is facing a GST notice for tax underpayment. As per a regulatory filing, LIC has been instructed to remit a GST amounting to 10,462, in addition to a 20,000 penalty and 6,382 in interest charges, resulting in a combined sum of around 37,000.

For the fiscal year 2019-20, the State Taxes Officer issued this notice. According to the state’s assertion, LIC mistakenly paid taxes on specific invoices at a 12 percent rate instead of the mandated 18 percent rate. Consequently, LIC has been directed to make an additional payment to correct this underpayment issue.

Setbacks for LIC

Although this notice’s impact on LIC’s financials, operations, and overall activities is relatively insignificant, it follows closely on the heels of the company receiving notices from the Income Tax department, resulting in penalties amounting to 84 crore. These notices were related to the financial years 2013, 2019, and 2020, and were issued on September 29, 2023.

Despite these setbacks, LIC’s stock market performance remained positive on October 11, 2023. At 2:54 p.m. on the BSE, the company’s shares were valued at 638.90 per piece, indicating a 0.5 percent increase compared to the previous day’s closing price.

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Another GST Notice

In addition to the previously mentioned GST notice, LIC found itself dealing with yet another GST notice in September, this time from the Bihar taxation authorities. This notice carried a tax demand of 166.75 crore, accompanied by an interest charge of 107.5 crore and a penalty amounting to 16.67 crore. In response, LIC has announced its intention to lodge an appeal before the GST Appellate Tribunal within the stipulated time frame to contest the order.

Furthermore, LIC’s performance remained weak in September, as reported by the Life Insurance Council. The company witnessed a substantial 27% drop in new business premiums, whereas private insurers managed to maintain growth and stability during the same period.

Importance of Compliance

To sum up, the recent GST notice and penalties served to LIC underscore the critical importance of adhering to GST regulations. While these issues haven’t had a major impact on LIC’s overall operations, they emphasize the need for organizations to diligently comply with tax laws to prevent such complications. LIC is steadfast in its commitment to resolving these notices through proper legal channels and is focused on enhancing its performance in the upcoming months.

FAQs

Q: What is the total amount LIC has been asked to pay for underpaying taxes?

A: LIC has been asked to pay a GST of 10,462, along with a penalty of 20,000 and interest of 6,382, totaling approximately 37,000.

Q: Are the recent notices impacting LIC’s financial terms and operations?

A: The recent notices have not had a significant impact on LIC’s financial terms, operations, and other activities.

Q: What is the LIC’s plan to challenge the GST notice?

A: LIC plans to file an appeal before the GST Appellate Tribunal within the given timelines to challenge the order.