LIC gets ₹ 25,464 crore income tax refund on interim bonus to policyholders’ issue
In a major relief for Life Insurance Corporation (LIC), the income tax department has issued a refund intimation of ₹ 25,464.46 crore for seven different assessment years.
The aggregate ₹25,464 crore refund pertains to AY 2012-13, 2013-14, 2014-15, 2016-17, 2017-18, 2018-19, and 2019-20, LIC said in a filing with stock exchanges.
Simultaneously, income tax department has now issued two separate tax demand orders amounting to ₹1,395 crore ( for AY 2015-16) and for ₹1,370 crore (for AY 2011-12).
The refund pertains to the ongoing dispute between the income tax department and LIC over the allowability (as a deductible expenditure) of interim bonus paid to policyholders by the corporation.
While LIC had been taking the position that such interim bonus payouts was an allowable expenditure for taxation purposes, the assessing officer in income tax department had initially taken a view that it was taxable as surplus was being distributed as an interim bonus.
This tax department view was however challenged by LIC before various appellate forums including ITAT, which directed the assessing officer in the tax department to re-examine the allowability aspect.
On reconsideration, the assessing officer while issuing refund for these seven assessment years also made a separate demand order of ₹2,133 crore.
So as against earlier expected refund of about ₹ 27,500 crore for seven assessment years, LIC has now got refund of ₹ 25,464 crore after adjusting ₹ 2,133 crore, sources said.
Had interim bonus been entirely allowed, refund would have been increased accordingly along with interest, sources said.
LIC now plans to appeal before Commissioner (appeals) against all the three demand orders — ₹ 2,133.67 crore, ₹ 1,395 crore and ₹ 1,370 crore — for various assessment years, according to LIC’s filings with the stock exchanges.
LIC also said there is no material impact on financials, operations or other activities of the corporation due to these demands orders.
GST demand notices
LIC has, this fortnight, been served with a slew of GST demand notices from GST authorities in Maharashtra, Gujarat, Tamil Nadu, and Uttarakhand.
The Gujarat GST Authority had recently issued a GST-related demand order for ₹382 crore.
The demand notice covers GST dues of ₹191 crore and a penalty of ₹191 crore, besides applicable interest. The demand, penalty, and interest have been levied for FY 2017-18 & 2018-19.
On January 3, LIC received a combined demand order of ₹667.5 crore from tax authorities in Tamil Nadu, Uttarakhand, and Gujarat. Tamil Nadu’s GST demand was for ₹663.45 crore, Uttarakhand’s tax authority had asked for ₹4.28 crore and Gujarat’s tax authority had put a tax demand of ₹39.39 lakh.
LIC had, on January 1, received another GST demand order to the tune of ₹806.3 crore from tax authorities in Maharashtra.