ICICI Lombard slapped tax demands, penalties worth ₹1,908 cr

Shares of general insurance company ICICI Lombard General Insurance Company Ltd fell 1.6% today after the company received a Goods and Services Tax (GST) demand worth ₹1,728.8 crore and ₹1,72.8 crore penalty. The company says it'll file an appeal against the order.

"The Company has now received an order on December 27, 2023 at 7:27 p.m. with respect to aforesaid SCN (show-cause notice) confirming GST demand of ₹17,288,610,803/- and levying a penalty of ₹1,728,861,079," ICICI Lombard says via an exchange filing.

The order received from the joint commissioner, CGST & CX Thane commissionerate, alleges non-payment of GST on the coinsurance premium received and also the non-payment of GST on re-insurance commission deducted from the reinsurance premium ceded to various Indian and foreign reinsurers.

ICICI Lombard says the said matter is industry industry-wide issue. "GST demand of ₹1,728,86,10,803/-, Penalty of ₹1,728,861,079/- and Interest u/s 50 of the Act, would be appropriately assessed for disclosure as Contingent Liability in the Financial Statements of the Company. Based on the advice of tax advisors, the Company will be filing an appeal against the said order within the prescribed timelines post making a pre-deposit, as may be required," ICICI Lombard says.

In addition to that, ICICI Lombard has also received an order from the assistant commissioner of GST & central excise, Nugambakkam Division, Chennai, from July 2017 to March 2020, raising a GST demand of ₹6,435,178, interest of ₹1,578,829 and levying penalty of ₹2,91,476.

Of this, the company has already paid GST demand of ₹4,163,282 and interest of ₹1,578,829. "Accordingly, the authority has appropriated GST demand and interest to the extent already paid. Therefore, the net demand is ₹25,63,372 (GST+penalty), excluding interest on the net GST demand under Section 50 of the Central Goods and Services Tax Act, 2017," says the company, adding that it'll file an appeal against the said order.

The joint commissioner CGST & Central Excise, Bhopal, Madhya Pradesh, has also issued a GST demand order worth ₹5.6 crore and a penalty worth ₹56.6 lakh on the company. The order has been imposed on the computation of input tax credit eligible to the company and alleged “undischarged tax liability” due to differences between returns filed.

In total, these GST demands and penalties amount to ₹1,908 crore.

Parent ICICI Bank has also received a similar tax demand from the tax authority. The private lender in its filing confirms to have received an order from the Tamil Nadu GST department, raising a tax demand of ₹24.3 crore and a penalty worth 2.4 crore. The bank will also file an appropriate appeal against the order.

Notably, several companies have received GST demand worth several hundred crores of rupees from tax authorities in different states. Some, including IndiGo, have already received interim relief on the tax matters.

Shares of ICICI Lombard are trading in the red today, in line with the broader market as the BSE Sensex hovers in the negative territory of 72,300, down 109.59 points. At the current share price of ₹1,418.35, ICICI Lombard's m-cap stands at ₹69,823.17 crore. ICICI Lombard's Q2 FY24 (September-October) profit was ₹577.2 crore, while its total income was ₹5,049 crore.