GST authority issues Rs 922 cr show cause notices to Reliance General Insurance
Reliance General Insurance Company (RGIC), a subsidiary of Reliance Capital Ltd, has received multiple show cause notices from the Directorate General of GST Intelligence, amounting to Rs 922.58 crore. According to sources, the company has received four notices from the DGGI demanding GST of Rs 478.84 crore, Rs 359.70 crore, Rs 78.66 crore, and Rs 5.38 crore respectively, on the revenue generated from the services like re-insurance and co-insurance. According to a tax expert, the RGIC auditors will have to provide for this amount in its quarterly results ending September 30, as a contingent liability. RGIC is the crown jewel of Reliance Capital which is undergoing a debt resolution process through NCLT. RGIC constitutes almost 70 per cent of the total value of Reliance Capital.
RGIC received a show cause notice from the DGGI on September 28, amounting to Rs 478.84 crore in the matter of applicability of GST on re-insurance commission booked on the re-insurance services ceded to various Indian and Foreign Reinsurance companies, the sources said.
The GST Authority’s contention is that re-insurance commission forms part of the revenue recorded by the company in its books of accounts and thus it needs to pay GST on the same. Similarly, another show cause notice, amounting to Rs 359.70 crore, was received by the company on September 28, in the matter of applicability of GST on the co-insurance premium received as a follower in the co-insurance transactions, they said.
The company’s contention is that the lead insurer has already discharged its GST liability on the entire premium, therefore, there is no need for the company to pay GST on the realisation of Follower Premium. But, the GST department is of the opinion that there
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