The ICICI Lombard General Insurance stock opened 2 percent lower on September 28 after the insurer received a notice from the Directorate General of GST Intelligence (DGGI) for not paying tax of Rs 17,28,86,10,803 (around Rs 1,730 crore) from July 2017 to March 2022.
ICICI Lombard said in an exchange filing it received a "show cause-cum- demand notice from the Directorate General of GST Intelligence, Pune Zonal Unit under Section 73(1) of the Central Goods and Services Tax Act, 2017 (“the Act”), i.e. on September 27, 2023 alleging a tax demand of Rs 17,28,86,10,803".
At 9.20 am, the stock was quoting at Rs 1,277.25 on the National Stock Exchange, down 2.02 percent from the previous close. The development comes two days after the appointment of Sanjeev Mantri as the new Managing Director and Chief Executive Officer of the company.
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"The alleged demand and the impugned show cause cum demand notice (SCN) pertains to non-payment of GST on the co-insurance premium accepted as follower in case of coinsurance transactions and non-payment of GST on re-insurance commission accepted on the reinsurance premium ceded to various Indian and foreign reinsurance companies during the period July 2017 to March 2022," the company said.
The SCN refers to matters relating to industry-wide issues and based on the advice of its tax advisers. The company will take appropriate steps in due course to reply to the SCN and contest the matter, it said.
This is the second tax notice to the company in three months. In July, the company had received another notice for a tax liability of Rs 273.44 crore under Section 74(1) of the Central Goods and Services Tax Act, accompanied by interest charges and a penalty.
In June, another one of ICICI's insurance companies, ICICI Prudential Life, received a notice from DGGI for not paying tax of Rs 492.06 crore for a period of five years starting from July 2017.
For the quarter ended June 2023, ICICI Lombard General Insurance reported a net profit of Rs 390.4 crore, a jump of 12 percent on-year. Gross premium climbed 19.7 percent YoY to Rs 6,622.1 crore against Rs 5,530 crore in Q1 FY23.
The insurer's combined ratio in the quarter improved to 103.8 percent in the June quarter as against 104.1 percent a year ago.
The combined ratio is the sum of incurred losses and operating expenses measured as a percentage of earned premiums. A lower combined ratio means the company is doing better financially.
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