Reliance General Insurance Company, which is a subsidiary of Reliance Capital, has reportedly received show cause notices from the Directorate General of GST Intelligence (DGGI) for almost Rs 923 crore.
A tax expert has said that this amount will have to be provided for by RGIC's auditors in its quarterly results which end on 30 September
Reliance General Insurance Company, which is a subsidiary of Reliance Capital, has reportedly received show cause notices from the Directorate General of GST Intelligence (DGGI) for almost Rs 923 crore.
The notices, demand that RGIC pays GST on revenue generated from services such as co-insurance and re-insurance.
According to sources, the company has received four notices from the DGGI demanding GST of Rs 478.84 crore, Rs 359.70 crore, Rs 78.66 crore, and Rs 5.38 crore respectively.
A tax expert has said that this amount will have to be provided for by RGIC's auditors in its quarterly results which end on 30 September.
RGIC is currently undergoing a debt resolution process through NCLT.
The GST authority claims that re-insurance commission is part of the revenue recorded in the company's books of accounts, and therefore GST must be paid on it.
RGIC argues that the lead insurer has already paid GST on the entire premium, and therefore it does not need to pay GST on the realisation of follower premium.
However, the GST department argues that there is no provision in the GST Act for one registered person to collect and disburse tax on behalf of another, regardless of any co-insurance arrangement.
When engaging in a co-insurance transaction, the insured can choose to distribute their risk among multiple insurers by assigning risk share to each one.
The insurer that bears the most significant portion of the risk is known as the lead insurer, and the others who share the risk are referred to as the participating co-insurers or followers.
With inputs from PTI