Brands
Discover
Events
Newsletter
More

Follow Us

twitterfacebookinstagramyoutube
Youtstory

Brands

Resources

Stories

General

In-Depth

Announcement

Reports

News

Funding

Startup Sectors

Women in tech

Sportstech

Agritech

E-Commerce

Education

Lifestyle

Entertainment

Art & Culture

Travel & Leisure

Curtain Raiser

Wine and Food

YSTV

ADVERTISEMENT
Advertise with us

GST authority issues Rs 922 Cr show cause notices to Reliance General Insurance

According to a tax expert, the RGIC auditors will have to provide for this amount in its quarterly results ending September 30, as a contingent liability.

GST authority issues Rs 922 Cr show cause notices to Reliance General Insurance

Sunday October 08, 2023 , 3 min Read

Reliance General Insurance Company (RGIC), a subsidiary of Reliance Capital Ltd, has received multiple show cause notices from the Directorate General of GST Intelligence, amounting to Rs 922.58 crore.

According to sources, the company has received four notices from the DGGI demanding GST of Rs 478.84 crore, Rs 359.70 crore, Rs 78.66 crore, and Rs 5.38 crore respectively, on the revenue generated from the services like re-insurance and co-insurance.

According to a tax expert, the RGIC auditors will have to provide for this amount in its quarterly results ending September 30, as a contingent liability.

RGIC is the crown jewel of Reliance Capital which is undergoing a debt resolution process through NCLT. RGIC constitutes almost 70% of the total value of Reliance Capital.

RGIC received a show cause notice from the DGGI on September 28, amounting to Rs 478.84 crore in the matter of applicability of GST on re-insurance commission booked on the re-insurance services ceded to various Indian and Foreign Reinsurance companies, the sources said.

The GST Authority's contention is that re-insurance commission forms part of the revenue recorded by the company in its books of accounts and thus it needs to pay GST on the same.

Similarly, another show cause notice, amounting to Rs 359.70 crore, was received by the company on September 28, in the matter of applicability of GST on the co-insurance premium received as a follower in the co-insurance transactions, they said.

The company's contention is that the lead insurer has already discharged its GST liability on the entire premium, therefore, there is no need for the company to pay GST on the realisation of Follower Premium.

But, the GST department is of the opinion that there is no provision in the GST Act where one registered person can collect and disburse tax on behalf of another, regardless of any co-insurance arrangement.

Also Read
NCLT directs Swan Energy to make upfront payment for Reliance Naval

In the co-insurance transaction, the insured has the option to spread their risk amongst more than one insurer by allocating risk share to multiple insurers. The company bearing the largest share of risk cover is termed as the lead insurer, while the other insurers sharing the risk are called to the participating co-insurers or followers.

In the third show cause notice, amounting to Rs 78.66 crore, the DGGI had initiated an investigation into the matter of availing input tax credit (ITC) without underlying services with regard to marketing expenses, during the period July 1, 2017 to March 31, 2022, sources said.

In this matter the company has deposited, under protest, the ITC amount of Rs 10.13 crore.

The fourth show cause notice received by the company from the DGGI is in the matter of non payment of GST under reverse charge basis on the import of reinsurance services from foreign reinsurers in respect of exempted crop insurance scheme, during the period July 2017 to January 2018.

The GST Authority has issued a tax notice of Rs 5.38 crore in this matter, they added.