The tax department has issued notices to 20 general insurance companies, including HDFC Ergo and Star Health, demanding tax dues totaling Rs 2,000 crore. These companies, operating in Special Economic Zones (SEZs), are under scrutiny for their GST liabilities.
List of Targeted Insurance Companies
According to a report by ET, the companies facing these notices include HDFC Ergo General Insurance, Star Health and Allied Insurance, Cholamandalam MS General Insurance, New India Assurance, and United India Insurance. The GST department has issued show-cause notices to all involved.
Focus on Integrated GST
Sources indicate that the Directorate of GST Intelligence (DGGI) issued these notices concerning Integrated GST liabilities. While Section 16 of the Integrated GST Act exempts SEZ-based supplies or exports from tax, the notices target services provided to employees and families of SEZ industrial units.
Previous Incidents and Larger Impact
This isn’t the first time insurance companies have been targeted by the tax department for GST dues. Previously, around 30 companies received notices totaling Rs 5,500 crore, related to alleged irregularities in agent commission payments—a move contested by the insurers.
How the Tax Liability Was Calculated
The Directorate of GST Intelligence calculated the GST liability at 18% on services provided to SEZ employees and their families, leading to the Rs 2,000 crore demand. So far, no responses have been issued by the implicated insurance companies.
