Reliance General Insurance gets GST notices worth Rs 922 crore from DGGI: Report
DGGI sent the company four notices seeking GST of Rs 478.84 crore, Rs 359.70 crore, Rs 78.66 crore, and Rs 5.38 crore respectively on the revenue generated from services like re-insurance and co-insurance, PTI reported citing sources aware of the matter.
According to a tax expert, the auditors will have to provide for this amount in its quarterly results ending September 30 as a contingent liability. Reliance General Insurance Company constitutes almost 70 per cent of the total value of Reliance Capital which is undergoing a debt resolution process.
The company received its first show cause notice amounting to Rs 478.74 crore from the DGGI on September 28 in the matter of applicability of GST on re-insurance commission booked on the re-insurance services ceded to Indian and foreign reinsurance companies, the sources told the news agency.
The DGGI believes that the re-insurance commission constitutes the revenue recorded by the company in its book of accounts and thus it needs to pay GST for the same. The second show cause notice worth Rs 359.70 crore was sent to the company in the matter of applicability of GST on the co-insurance premium received as a follower in the co-insurance transactions.
In this case, the company has stated that the lead insurer has already discharged its GST liability on the entire premium, therefore, there is no need for the company to pay GST on the realisation of Follower Premium. The GST department, however, believes there is no provision in the GST Act where a registered person can collect and disburse tax on behalf of another regardless of any co-insurance arrangement.
In the third show cause notice amounting to Rs 78.66 crore, the DGGI initiated an investigation into the matter of availing input tax credit (ITC) without underlying services with regards to marketing expenses from July 1, 2017 to March 31, 2022. In this matter, the company has deposited the ITC amount worth Rs 10.13 crore under protest.
The fourth show-cause notice worth Rs 5.38 crore to the company is related to the non-payment of GST under reverse charge basis on the import of reinsurance services from foreign insurers regarding exempted crop insurance schemes from July 2017 to January 2018.
