LIC Slapped With Rs 663 Crore GST Demand Notice For ‘Wrong ITC Availment’

LIC (Life Insurance Corporation of India) faces a demand notice of ₹663.45 crore for short payment of GST (Goods and Services Tax).

The demand notice was issued by the Office of the Chennai North Commissionerate on January 1, 2024, for the period between 2017-18 and 2018-19, and it pertains to wrong availment of Input Tax Credit (ITC) and non-payment of tax on turnover.

LIC has stated that it will file an appeal against the demand order for interest and penalty.

The impact of the demand notice of ₹663.45 crore for short payment of GST on LIC’s financials and operations is expected to be minimal, according to the company. LIC has stated that there will be “no material impact on financials, operations, or other activities of the Corporation” due to the demand notice

The company also mentioned that it will file an appeal against the demand order for interest and penalty. Therefore, while the demand notice is significant in terms of the amount, LIC has indicated that it will not have a substantial impact on its financials and operations.

The Reasons Behind the Demand Notice

The demand notice of ₹663.45 crore for short payment of GST that LIC has received pertains to two alleged violations of GST rules.

The first violation is the wrong availment of Input Tax Credit (ITC), which refers to the credit that businesses can claim for the tax paid on inputs used in the production of goods or services.

The second violation is the non-payment of tax on turnover that was wrongly declared as non-GST supply in GSTR-1, which is a monthly or quarterly return that businesses file to report their sales and purchases. 

LIC has stated that it will file an appeal against the demand order for interest and penalty.

Broader Implications of the Demand Notice for Other Companies

The demand notice of ₹663.45 crore for short payment of GST that LIC has received has broader implications for other companies and the GST regime in India. The notice is part of a trend of GST authorities issuing demand notices to companies for alleged violations of GST rules, including incorrect availment of Input Tax Credit (ITC) and non-payment of tax on turnover. 

This trend is likely to continue in the coming months, and it could impact the financials and operations of companies that receive such notices. The demand notice to LIC is significant in terms of the amount, and it highlights the need for companies to comply with GST rules and regulations to avoid such issues. 

The broader implications of the demand notice for the GST regime in India include the need for better enforcement of GST rules, simplification of the GST system, and greater clarity on the rules and regulations. 

The demand notice to LIC also underscores the importance of companies having robust compliance mechanisms in place to avoid GST-related issues.