Star Health and Allied Insurance, a prominent insurance company, is facing a hefty tax demand of ₹38.99 crore from the Directorate General of GST Intelligence (DGGI), as reported in its recent filing with the Bombay Stock Exchange (BSE) on Monday.
The notice, issued under Section 74(5) of the Central Goods and Services Tax Act, 2017, alleges non-payment of GST liability on premiums received by the company during the period from July 2017 to March 2023, under a coinsurance arrangement.
Star Health and Allied Insurance has confirmed its intention to respond to the GST show cause notice within the stipulated timeframe, as per the filing. Notably, the company's shares have experienced a decline of 0.63% Year-to-Date and a significant 19.12% drop in the past year.
This development comes after a previous notice in August when the company was directed by the GST department in Chennai to pay ₹104 crore in taxes due to discrepancies in returns filed during the fiscal year 2019-20. These discrepancies were related to output and input mismatches, as well as variations in ineligible tax credits (ITC), as disclosed in the company's filing.
Additionally, in recent days, another insurance company, Reliance General Insurance Company (RGIC), also faced multiple show cause notices from the DGGI, totalling ₹922.58 crore. One of these notices, amounting to ₹478.84 crore, concerned tax payment on re-insurance commission booked through re-insurance services ceded to various Indian and foreign entities.
The insurance sector in India is undergoing increased scrutiny from tax authorities, with companies like Star Health and RGIC grappling with significant GST demands, indicating a challenging period for the industry.