Breaking down the colossal demand, LIC faces ₹365.02 crore of GST liabilities, coupled with a staggering penalty of ₹404.7 crore, and an additional interest payment of ₹36.5 crore. These charges primarily stem from purported violations including the failure to adhere to specific CGST rules, particularly concerning the reversal of input tax credit as mandated by rules 37 and 38. Furthermore, GST officials highlighted discrepancies in the reversal of input tax credit claimed from reinsurance, along with inadequate compliance with the reverse charge mechanism (RCM) liability compared to what LIC’s suppliers reported.
In response to this substantial notice, LIC has expressed its intent to challenge the order by filing an appeal before the commissioner. Notably, the insurer affirmed through a regulatory filing that these developments are not anticipated to significantly impact its financials, operations, or other functions.
This notice from Maharashtra adds to a string of GST-related challenges LIC has encountered nationwide. Recent instances include a receipt of over ₹290 crore from Bihar state tax authorities in September 2023, encompassing tax liabilities, interest, and penalties. Earlier in October 2023, LIC faced a fine of ₹36,844 for underpayment of taxes in Jammu & Kashmir, paying 12% GST instead of the required 18% on certain invoices.
Furthermore, the Telangana arm of the taxation authority served LIC a notice in December 2023, demanding ₹183 crore, covering pending dues, penalties, and interest for the fiscal year 2017-18. This notice specifically required LIC to settle ₹81.2 crore in pending GST dues, a penalty amounting to ₹93.2 crore, and an interest charge of ₹8.1 crore.
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