Public sector insurers pay Rs 3,000 cr tax for 2004-05

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New Delhi, April 18: Life Insurance Corporation (LIC), General Insurance Corporation (GIC) and four general insurance companies have contributed over Rs 3,000 crore in corporation tax for 2004-05 following higher growth in business and profits. LIC alone paid about Rs 2,000 crore in taxes but has sought exemption for the amount set aside for meeting solvency margin, a finance ministry official said.

GIC chipped in with Rs 650 crore while the four GIPSA companies — New India Assurance, National Insurance, Oriental Insurance and United India — paid Rs 150-200 crore each, he said. Although the insurers have not yet come up with their audited results, the official said they have paid taxes in advance.

LIC had approached the finance ministry for exempting a portion of its surplus that went for meeting solvency margin. The tax department, however, has not heeded to LIC’s request and the corporation had to deposit Rs 2,000 crore in taxes, sources said

In accordance with Irda’s directive, LIC has so far provided close to Rs 16,500 crore for meeting the solvency margin. Irda stipulates that assets should exceed liabilities by 1.5 times for life insurance companies. LIC has appealed against the tax treatment at an appellate tribunal for getting the tax benefit on the amount set aside for solvency requirement, the official said.

LIC’s surplus or profits is estimated to be close to Rs 16,000 crore last fiscal on account of higher growth in premium income. The corporation’s surplus stood at close to Rs 11,000 crore in 2003-04.