INSURANCE
LIC gets Rs 2,050 crore service tax notice from DGGI
Jun-18-2018

India’s largest insurance company, Life Insurance Corporation of India (LIC) has received an Rs 2,050 crore service tax notice from the Directorate-General of Goods & Services Tax Intelligence (DGGI) for non-payment of service tax on forfeited policies (policies discontinued because of non-payment of premium) since July 2012.

Tax officials said the notice was issued by the DGGI's Kolkata zonal office for alleged ‘suppression of facts with intent to evade payment of service tax’ on forfeited policies. LIC officials admitted getting the DGGI notice based on tax officials’ interpretation of certain provisions of the Finance Act, but added that they had replied to the notice and there was no suppression of facts.

GST officials said that this Kolkata DGGI notice can become an example in the industry that has 23 life insurance companies besides LIC. GST expert Sanjib Kothari said companies could go for adjudication in such cases but felt it would be better to pay the tax after asking for waiver of the penalty and interest portions. Defaulters may have to pay the entire amount if they opt for adjudication and their plea is dismissed, he said.
 

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