LIC receives income tax demand notice for FY22
New Delhi, March 25
Life Insurance Corporation of India on Wednesday said that it has received a massive tax demand from the Income Tax Department for the financial year 2021-22.
In its disclosure in a regulatory filing, LIC said the Assessment Unit of the tax department has raised a demand of Rs 61,46,71,18,015 as income tax, along with an additional interest amount of Rs 9,53,25,87,935.
The insurer clarified that it plans to challenge this order and will file an appeal before the Commissioner of Income Tax (Appeals) through the legal process available.
The tax demand has arisen due to several adjustments made by the tax authorities during the assessment.
These include treating interim bonuses as income, adding losses from the Jeevan Suraksha Fund as income, and considering negative reserves as income.
The department has also disallowed certain deductions claimed by LIC under Section 80M, along with interest expenses linked to delays in depositing tax deducted at source (TDS).
Despite the large amount involved, LIC stated that the order will not have any material impact on its overall operations or business activities.
The financial implication, it said, is limited to the tax and interest amounts mentioned in the demand.
The disclosure was made in compliance with Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which requires listed companies to inform stock exchanges about significant developments.
LIC also confirmed that the information has been shared with stock exchanges and uploaded on its official website.
Following the update, LIC's shares closed higher on the market. On the NSE, the stock ended at Rs 779.60, gaining Rs 20.90 or 2.75 per cent, while another recorded closing price showed it at Rs 781.10, up Rs 22.40 or 2.95 per cent.
— IANS
Reader Comments
Interesting that the stock price went UP after this news. The market seems confident LIC will win the appeal. But treating interim bonuses as income? That seems like a technical interpretation by the tax department. LIC should fight this.
As a retired person with LIC policies, this is worrying. LIC is a trusted name for crores of Indians. The government should ensure such disputes are settled fairly without harming the public's trust. Our life savings are involved.
On one hand, the tax department is doing its job to collect revenue. On the other, LIC is a state-owned giant. It feels like the left hand is demanding money from the right hand. 🤔 The legal process will be long and costly for taxpayers.
Respectfully, this highlights a need for clearer regulations. If interim bonuses and negative reserves are being interpreted differently, it creates uncertainty for all insurers. Hope the appeal brings clarity for the entire sector.
Watching from abroad, the scale is staggering. ~$8.5 billion! It's a reminder of the sheer size of India's domestic financial institutions. The transparency in disclosure (SEBI rules) is a positive sign for market maturity.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.