The tax department has issued notices to 20 general insurance companies, including prominent names like HDFC Ergo and Star Health, demanding GST dues amounting to Rs 2,000 crore. These companies, operating in Special Economic Zones (SEZs), are under scrutiny for their tax liabilities.
Companies Under the Radar
As reported by ET, the GST department has sent show-cause notices to 20 general insurance companies, including HDFC Ergo General Insurance Company, Star Health and Allied Insurance, Cholamandalam MS General Insurance Company, New India Assurance Company, and United India Insurance Company, for unpaid GST dues.
Issue with Integrated GST
According to sources cited in the report, the Directorate General of GST Intelligence (DGGI) issued these notices concerning Integrated GST liabilities. Under Section 16 of the Integrated GST Act, supplies or exports within SEZs are tax-exempt. However, the notices pertain to services provided to employees and their families working in industrial units within SEZs.
Previous Notices Worth Rs 5,500 Crore
This isn’t the first time insurance companies have faced scrutiny over GST dues. Previously, around 30 insurance companies were sent notices concerning tax dues exceeding Rs 5,500 crore. The tax department had alleged irregularities in commission payments to agents, a claim the insurance companies contested.
Basis for the Rs 2,000 Crore Liability
The DGGI has calculated the GST liability at 18 percent on services provided to employees and their families in SEZ units. Based on this calculation, the insurance companies face a combined liability of approximately Rs 2,000 crore. As of now, there has been no official response from the companies involved.
