ICICI Prudential Faces Rs 391 Crore Income Tax Demand Over Several Issues

The ICICI Prudential Life Insurance Company Ltd. has recently disclosed that it has received an Income Tax Order raising a significant tax demand of Rs 391.08 crore due to several issues, including disallowed exemptions.

Background of the Case

The department has issued an income tax order under section 143(3) of the Income Tax Act for AY 2024-25, in which the income tax department has raised a demand based on raised aspects like the following:

• Negative reserves are treated as taxable surplus.
• Transfers from a shareholder’s account to a policyholder’s account are treated as income.
• Shareholders’ income is taxed as income from other sources.
• Exemptions under section 10 towards certain income are disallowed.
• Disallowance as per Section 14A, read with Rule 8D, made towards exempt income.

As a result, the department has raised a demand of Rs 3,910,838,913, which includes income tax of Rs 3,471,293,534, along with interest of Rs 439,545,379.

Key Details of Order

Company’s Further Step

ICICI Prudential stated that all five issues mentioned in the order are already covered in the orders of courts, the Income Tax Appellate Tribunal, and the CIT(A) in its own case for the previous year.

The company said that it will challenge the order by filing an appeal before the appropriate authority within the specified time.

Financial Impact

Even though the order imposes a heavy demand, the company has clarified that there is no impact at this stage.

Disclosure Compliance

The above disclosure was given by ICICI Prudential Life Insurance Company Limited to both the stock exchanges under Regulation 30 and Regulation 51, read with Schedule III of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.