Bajaj Allianz received Rs.1,010 Crore GST Demand Notice from DGGI

The Financial Services Firm Bajaj Finserv Limited said its Subsidiary Firm Bajaj Allianz General Insurance has received show cause cum demand notice from the DGGI (Directorate General of GST Intelligence) for non-payment of GST on co-insurance and re-insurance premiums. The Tax Demand notice of Rs.1010 Crore was issued by the department on September 29, 2023.

According to the company’s BSE filing, “Bajaj Allianz General Insurance Company Limited (BAGIC), an unlisted material subsidiary of the Company, has received a Show Cause Cum Demand Notice under Section 73(1) of the Central Goods and Services Tax Act, 2017 on September 29, 2023, alleging a tax demand of Rs. 1010,05,80,540.”

The allegations in the notice cover the time period from July 2017 to March 2022. They are centred on two major issues: non-payment of GST on co-insurance premiums accepted as followers in coinsurance transactions, and non-payment of GST on reinsurance commission received for reinsurance premiums ceded to various Indian and foreign reinsurance companies.

The payment of GST on the two premiums has been a source of contention between the government and businesses.

Bajaj Allianz General Insurance has stated that these are industry-wide issues and that it intends to respond appropriately to the show cause cum demand notice within the prescribed timelines in consultation with its tax advisors.

Apart from Bajaj Allianz, many other insurance firms received a similar notice from DGGI.

DGGI issued a Rs.1,728 crore demand notice to ICICI Lombard General Insurance for failure to pay tax on certain supplies made between July 2017 and March 2022. The non-payment of GST on co-insurance and re-insurance premiums was also highlighted in the GST Notice sent to ICICI Lombard.

This wave of tax demands highlights the intense scrutiny that Indian companies are currently experiencing from various tax authorities across the country.