ICICI Prudential Life Insurance Company Ltd on Monday said it has received a show cause cum demand notice from the Directorate General of GST Intelligence (DGGI) for Rs 492.06 crore for the period July 2017 to July 2022.

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"...we wish to inform that the company has received a show cause cum demand notice from the Directorate General of GST Intelligence

asking the company to show cause as to why a tax of Rs 492,06,48,296 pertaining to the period July 2017 to July 2022 should not be demanded from the company, it said in an exchange filing.

Further, the company mentioned that it will take appropriate steps in due course to reply to the show cause cum demand notice and contest the matter. During the course of the inquiry, the company had deposited Rs 190 crore without accepting any liability in this regard, it said.

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Last week, HDFC Life Insurance received a Goods and Services Tax (GST) demand notice of Rs 942 crore for the period between July 2017 to March 2022. HDFC Life Insurance is likely to legally challenge the demand notice before CESTAT (Customs Excise and Service Tax Appellate Tribunal), sources told CNBC-TV18.

Last September, the Mumbai unit of the Directorate General of GST Intelligence (DGGI) said that an ITC of Rs 824 crore had been availed by 16 insurance companies on the basis of fake invoices. Out of this, insurers had voluntarily paid Rs 217 crore after the DGGI investigation.

DGGI investigations revealed that these insurers were actually paying commissions beyond IRDAI's permissible limit to their corporate agents in the garb of expenses related to marketing and brand activation. As per the GST law, such availing of the ITC is not permissible as the supply of said service did not actually take place.

Investigations revealed that these insurers were actually paying commissions beyond IRDAI’s permissible limit to their corporate agents in the garb of expenses related to marketing and brand activation.

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The norms with regard to payment of commission to agents and intermediaries have been modified by the insurance regulator IRDAI with effect from April 1, 2023. The modified norms prescribe an overall limit for management expenses, including commission-related expenditures, that an insurer can incur.