HDFC Life Insurance has received a show-cause-cum demand notice from the Directorate General of Goods and Services Tax Intelligence asking the insurer why a tax of around Rs 942.18 crore should not be demanded from it.
“The matter relates to the claiming of input tax credit against supply of services, which the (tax) authority believes are ineligible for such claims. The company has been advised by its legal and tax counsel that it has a good contestable case,” HDFC Life said in a stock exchange filing on Friday.
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The company said this is an industry-wide issue and it will be taking appropriate steps in due course to reply to the show-cause notice and contest the matter.
The Mumbai Zonal Unit of Directorate General of Goods and Services Tax Intelligence has sent the notice to the private insurer pertaining to the period of July 2017 to FY2022. HDFC Life informed the stock exchanges that it had deposited Rs 250 crore under protest with the tax authority in this matter in the past.
The insurance company also informed that Irdai has granted its approval for HDFC Limited to acquire additional shares in HDFC Life so as to hold more than 50% of its total share capital. “We wish to inform you that the Insurance Regulatory and Development Authority of India (IRDAI) vide its letter dated June 23, 2023, has granted its approval for transfer of shares of HDFC Life, from HDFC Limited to HDFC Bank in view of the proposed amalgamation, in terms of Section 6A of the Insurance Act, 1938,” it said.
Notably, the Competition Commission of India in its meeting held on June 20 granted its approval for HDFC to increase its stake in HDFC Life to more than 50%. The Reserve Bank of India in April allowed HDFC Bank or HDFC Limited to increase the shareholding in HDFC Life to over 50%.
At the end of the fourth quarter last fiscal, HDFC held a 48.65% stake in HDFC Life.