6 hours Ago By Samannay Biswas
The Life Insurance Corporation of India (LIC) has received a goods and services tax (GST) demand order amounting to Rs 479.88 crore from the Deputy Commissioner of State Tax, Mumbai, for the financial year 2020-21. The notice, issued on 27 February, includes Rs 242.
23 crore in GST, Rs 213.43 crore in interest, and Rs 24.22 crore as a penalty.
The demand is based on alleged wrong availment and short reversal of input tax credit (ITC), interest on late payments, and short payment of tax liability. LIC has stated that the demand order is appealable before the Joint Commissioner of State Tax (Appeals), Mumbai) and clarified that it does not materially impact its financials or operations. “The financial impact of the demand is to the extent of the GST, interest, and penalty.
There is no material impact on financials, operations, or other activities of the Corporation,” LIC said in a regulatory filing. Impact on LIC’s Market Performance Following the announcement, LIC's share price dropped 2.04 per cent, closing at Rs 741.
10 on the BSE, down Rs 15.45. Investors reacted cautiously to the tax demand, though LIC’s assertion that it will not significantly affect operations may help contain further downside pressure.
What’s Next for LIC? Given LIC’s plans to challenge the demand order, the final financial impact will depend on the outcome of the appeal. If successful, the liability could be significantly reduced or nullified. However, if the appeal is unsuccessful, LIC may have to make provisions for the tax liability, which could marginally affect its profitability in the coming quarters.
While the GST demand is notable, analysts believe that LIC’s strong market position and financial stability will help it absorb any potential financial strain, keeping long-term investor confidence intact..
