HDFC Life Insurance slapped with 942 Crore GST Demand Notice

The Directorate General of GST Intelligence (DGGI) has slapped a GST demand notice on HDFC Life Insurance for suspected non-payment of Goods and Services Tax (GST). The notice includes a demand for more than Rs 942 crore and is related to the claim of input tax credit for the supply of services that the DGGI considers are ineligible for such claims.

HDFC Life verified receipt of the show cause cum demand notice from the DGGI’s Mumbai Zonal Unit in a regulatory filing. The notice requires that the corporation give a valid reason why a tax of Rs 942,18,46,028 should not be imposed from the insurance from July 2017 to the financial year 2022.

HDFC Life Insurance remarked that the issue of input tax credit (ITC) is an industry-wide problem and underlined its plan to reply to the show cause notice and challenge the case. The corporation further stated that it has already deposited Rs 250 crore under protest with the DGGI in connection with this issue.

The demand notice adds to HDFC Life Insurance’s current problems. However, the insurer is dedicated to tackling the issue diligently, understanding the legal complications underlying the legitimacy of input tax credit claims.

In another key milestone, HDFC Life reported that the Competition Commission of India has allowed HDFC Ltd, one of the company’s promoters, increasing its stake in HDFC Life to more than 50%. This action underscores HDFC Ltd’s commitment to expanding its footprint in the insurance market and aligning its interests with HDFC Life’s long-term development possibilities.

In addition, HDFC Life announced that the Insurance Regulatory and Development Authority of India (IRDAI) has approved the transfer of shares from HDFC Ltd to HDFC Bank. Furthermore, the IRDAI has approved HDFC Ltd’s acquisition of additional shares in HDFC Life, allowing it to control more than 50% of the whole share capital.

As HDFC Life Insurance complies with the GST demand notice, regulatory approvals for stake transfer and increased ownership demonstrate the company’s commitment to maintaining a stable and well-capitalized structure while guaranteeing regulatory compliance in its operations.