LIC Gets GST Notice: Uncovering the Tax Troubles
In recent news, a significant financial development has sent shockwaves through the financial landscape. The Life Insurance Corporation of India (LIC) has found itself in hot water, receiving a GST (Goods and Services Tax) notice for allegedly paying taxes at a lower rate. This notice has stirred quite the buzz, and in this article, we will delve into the details to understand the implications and ramifications of this situation.
On October 11, 2022, LIC informed the stock exchanges that it had been issued a notice by the State Taxes Officer. The notice demands LIC to pay a GST of ₹10,462, a penalty of ₹20,000, and an interest of ₹6,382, totaling nearly ₹37,000. The notice, surprisingly, harks back to the financial year of 2019-20.
The crux of the issue lies in LIC’s tax payments. Instead of adhering to the 18 percent tax rate, LIC had paid taxes on certain invoices at the rate of 12 percent. This discrepancy has resulted in the hefty sum mentioned in the notice.
Despite the substantial amount mentioned in the notice, LIC remains resolute. The company has stated that this notice will have no material impact on its monetary terms, operations, or other activities. However, this situation is not isolated.
Other Troubles for LIC
This notice comes on the heels of another predicament that LIC found itself embroiled in. The Income Tax department issued notices to LIC for penalties amounting to ₹84 crore. These notices pertain to the financial years 2013, 2019, and 2020. Interestingly, the notices were issued on September 29, 2023, and brought to the company’s attention on October 3.
In spite of these issues, LIC’s stock remained resilient in the market. On October 11, 2023, LIC’s shares were trading positively, signifying investor confidence. The stock was valued at ₹638.90 per share on the BSE at 2:54 p.m., marking a 0.5 percent increase compared to the previous day’s close.
Furthermore, this is not the first time LIC has found itself in hot water regarding GST. In September, LIC received another GST notice, this time from the Bihar taxation affairs, amounting to ₹290 crore. This included a tax demand of ₹166.75 crore, interest of ₹107.5 crore, and a penalty of ₹16.67 crore. In response, LIC has announced its intention to file an appeal before the GST Appellate Tribunal, challenging the order within the given timelines.
The financial troubles appear to be affecting LIC’s performance. According to data generated by the Life Insurance Council, LIC reported a concerning 27% decline in new business premiums in the month of September. This is in stark contrast to private insurers, who reported growth and maintained steady actions.
In conclusion, LIC’s recent GST notice for paying taxes at a lower rate has thrust it into the spotlight for all the wrong reasons. While the financial impact may not be substantial, it raises questions about the company’s financial practices and oversight. Additionally, coupled with previous tax-related issues, LIC is facing a turbulent period that may impact its standing in the insurance sector.
Thank you for staying with us as we uncovered this crucial financial development. Remember, financial matters can be perplexing, but staying informed is the key to financial success.
1. What led to LIC receiving a GST notice for lower tax payments?
LIC received the notice because it had paid taxes on certain invoices at a lower rate (12 percent) instead of the prescribed 18 percent.
2. How much is LIC required to pay according to the GST notice?
The GST notice demands LIC to pay ₹10,462 as GST, ₹20,000 as a penalty, and ₹6,382 as interest, totaling nearly ₹37,000.
3. Are these tax issues affecting LIC’s stock performance?
Surprisingly, LIC’s stock remained resilient in the market, with a positive trend on the day the notice was reported.
4. What action is LIC taking in response to these notices?
LIC has announced its intention to file an appeal before the GST Appellate Tribunal to challenge the order.
5. How has LIC’s performance been in recent times?
LIC reported a 27% decline in new business premiums in the month of September, in contrast to private insurers who reported growth.