Transfer seeks to deal with business practices which have led to non-compliance
The Items and Companies Tax (GST) Council of India is anticipated to deliberate on GST implications for co-insurance and reinsurance in its forthcoming assembly.
The dialogue follows a advice from the fitment committee, as indicated by a senior authorities official in a report from Moneycontrol. The transfer seeks to deal with sure business practices which have led to GST non-compliance, necessitating clearer pointers.
GST authorities have not too long ago concluded probes into a number of insurance coverage corporations, uncovering tax evasion incidents throughout three distinct eventualities: extreme commissions to brokers, and points associated to co-insurance and reinsurance preparations. These findings have prompted the issuance of formal notices to the implicated insurance coverage entities.
The official indicated that these insurance-related issues, now widespread inside the business, can be reviewed by the GST Council following an examination by the fitment committee. The council’s agenda will embrace addressing stakeholder representations which were submitted to GST authorities. It’s anticipated to happen earlier than the tip of March.
GST notices for insurers
Notably, the Life Insurance coverage Company of India (LIC) was served with a GST discover for Rs 806.3 crore for the fiscal 12 months 2017-18, citing varied compliance lapses, together with the inaccurate reversal of enter tax credit linked to reinsurance actions.
Moreover, in 2023, Star Well being and Allied Insurance coverage confronted a GST demand of Rs 38.99 crore for alleged non-compliance associated to premiums collected beneath co-insurance preparations from July 2017 to March 2023.
ICICI Lombard Basic Insurance coverage additionally acquired a discover for about Rs 1,730 crore in unpaid GST spanning from July 2017 to March 2022. The fees concerned non-payment of GST on co-insurance premiums acquired and on reinsurance premiums ceded to each Indian and overseas reinsurance firms in the course of the specified interval.
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