Shares of ICICI Lombard General Insurance Company Ltd dipped 1.79% today after it received a show-cause-cum-demand notice from the Directorate General of GST Intelligence, Pune Zonal Unit, alleging a tax demand of ₹1,728.8 crore.
The alleged demand pertains to "non-payment of GST on the co-insurance premium" accepted as a follower in the case of coinsurance transactions and non-payment of GST on re-insurance commission accepted on the reinsurance premium ceded to many Indian and foreign reinsurance companies from July 2017 to March 2022.
ICICI Lombard says the 'show-cause-cum-demand notice' is an industry-wide issue. "...based on the advice of its tax advisors, the company will be filing the appropriate response to the said show cause-cum-demand notice within the prescribed timelines," says ICICI Lombard.
The ICICI Lombard stock, meanwhile, opened a gap down today at 1283.95 on the BSE, around 1.38% down from the previous session. The stock touched an intra-day low of ₹1,266, down 2.8%. At the current share price of ₹1,302.75, the ICICI Lombard stock is trading 8.4% lower than the 52-week high achieved on July 21, 2023. The ICICI Lombard m-cap is ₹62,656.61 crore.
Notably, other companies, specifically online gaming companies, have also received tax demand notices from the GST Intelligence recently. Online gaming company Nazara Technologies fell as much as 1% on Thursday after it received a show cause notice stating a tax demand of ₹2.83 crore from the Director General of GST Intelligence, Mumbai. The e-gaming company also says it will be filing its response to the said show cause notice within the prescribed timelines.
Before that, casino and online gaming firm Delta Corp also received notices worth ₹16,822 crore from the Directorate General of GST Intelligence for payment of shortfall tax. The first notice advises Delta Corp to pay an alleged tax liability of ₹11,139 crore, along with interest and penalty for the period from July 2017 to March 2022, failing which a show-cause notice will be issued to the company under Section 74(1) of the CGST Act, 2017 and Goa SGST Act, 2017.
The company has also received notices worth ₹5,682 crore against three of its subsidiaries — Casino Deltin Denzong, Highstreet Cruises, and Delta Pleasure Cruise Company. Highstreet Cruises and Entertainment has received the biggest tax demand of ₹3,289 crore. The amount claimed in the notice is based on the gross bet value of all games played at the casinos during the relevant period.
Notably, the 50th meeting of the Goods and Services Tax (GST) Council was held in July 2023, in which the GST Council recommended casino, horse racing, and online gaming be taxed at the uniform rate of 28% on full-face value. Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmakers or totalisators in the case of horse racing, and on the full value of the bets placed in case of the online gaming.
