CBIC slaps Rs 942 crore demand notice on HDFC Life Insurance Company

The investigation wing of the Central Board of Indirect Taxes and Customs (CBIC) slapped a notice showing cause of demand on HDFC Life Insurance for Rs.942.18 crore.

This notice relates to a charge for misusing an Input Tax Credit without the Essential Supply of Services.

The private life insurance company, on file with BSE, said it had received a notice of cause and demand from the Directorate General (DG) of GST Intelligence, Mumbai district unit. It asked why the company did not claim tax of Rs. 942.18 crore relating to the period from July 2017 to FY22.

It relates to a claim for input tax deduction for the supply of services, which the Authority believes does not qualify for such claims.

HDFC Life said its legal and tax advisor said the company had an appealable good case. This was an industry-wide issue and the Company will take appropriate steps in a timely manner to respond to the notice of cause of display and to contest the matter. I have deposited 250 crore with authority in this matter in the past.

The Managing Director of GST Intelligence is currently investigating 15 insurance companies, several brokers and channel partners for false invoices and erroneously alleged tax credits.

The investigation suite recorded the data of all the insurance companies and brokers involved. She is preparing to issue show cause notices. I know that some notifications have already been communicated.

Meanwhile, the Insurance Regulatory and Development Authority of India (IRDAI) has given approval to transfer shares of HDFC Life from HDFC to HDFC Bank.

The gesture comes in light of the proposed merger of HDFC Home Mortgage Corporation with HDFC Bank.

IRDAI also gave approval to HDFC to acquire additional shares in HDFC Life to raise its stake to more than 50 percent of its total share capital.