HDFC Life receives income tax demand aggregating ₹296.76 crore

HDFC Life Insurance Company said it has received an income tax demand aggregating ₹296.76 crore from the Assistant Commissioner of Income Tax, Central Circle 6(2), Mumbai, on September 25, 2024.

The order for assessment year 2022-23 (financial year 2021-22) comprises tax demand of ₹255.93 crore and interest of ₹40.83 crore, per the company’s regulatory filing.

HDFC Life said: “While calculating the above tax demand, there are arithmetical inaccuracies involved. The company is in the process of filing rectification application before the tax authority with respect to the above.

“In our view, post passing of the rectification order, the rectified tax demand shall be approximately ₹116 crore and interest shall be recomputed accordingly.”

The company said the aforementioned order is appealable before the appellate authority. Hence, it will file its appeal within the specified period.

Disclosing the details of the violation(s)/ contravention(s) committed or alleged to be committed, the life insurer said: “Shareholders net investment income classified as ‘income from life insurance business’ instead of ‘income from other sources’; Certain incomes should not be claimed as exempt under Section 10; Contribution from Shareholders’ incorrectly claimed as a deduction while computing Shareholders’ profits;

“…Certain marketing and advertising expense in financials considered as admissible expense incorrectly while calculating the taxable surplus in Policyholder’s Account…”