ICICI Lombard receives a DGGI show-cause letter and a GST liability of Rs 273 crore

9 Aug 2023 , 01:34 AM

On August 9, a day after the firm received a Show Cause Notice (SCN) from the Directorate General of GST Intelligence, the share price of ICICI Lombard General Insurance decreased by more than 1%.

In accordance with Section 74(1) of the Central Goods and Services Tax Act, the notification dated July 26 alleges a tax debt of Rs 273.44 crore, along with interest and a penalty.

The main issue is the prevalent practice of applying GST to Input Tax Credits related to settled vehicle claims that have been salvage-adjusted and disallowed.

ICICI Lombard has deposited a deposit of Rs 104.13 crore under protest, although it has not accepted any liability for this situation. According to the corporation, the deposit’s amount has been disclosed.

The Directorate General of GST Intelligence (DGGI) had previously issued a notice to ICICI Prudential Life on June 26 for failing to pay tax totaling Rs 492.06 crore over a five-year period beginning in July 2017 and ending in July 2022.

ICICI Lombard General Insurance reported a net profit of Rs 390.4 crore for the three months that ended in June 2023, an increase of 12% year over year. In Q1 FY23, gross premium increased by 19.7% YoY to Rs 5,530 crore from Rs 6,622.1 crore.

Comparing the June quarter to the same period last year, the insurer’s combined ratio increased to 103.8% from 104.1%.

The total of incurred losses and operational costs expressed as a percentage of earned premiums is known as the combined ratio. A lower combined ratio indicates improved financial performance for the organization.

The RBI gave the ICICI Bank permission on August 7 to grow its investment in the ICICI Lombard General Insurance Company in a number of tranches up to 4%.

At the moment, the private lender owns 48.01% of ICICI Lombard.

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