NEW DELHI: Reliance General Insurance Company (RGIC), a subsidiary of Reliance Capital, has received show cause notices amounting to nearly Rs 923 crore from the Directorate General of GST Intelligence. According to sources, the company has received four notices from the DGGI demanding GST on the revenue generated from 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 undergoing a debt resolution process through NCLT. 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.
The company says the lead insurer has discharged its GST liability on the entire premium, therefore, there is no need for it to pay GST on the realisation of follower premium. But, the GST department is of the opinion that there is no provision in the GST Act where one registered person can collect and disburse tax on behalf of another, regardless of any co-insurance arrangement. agencies
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 undergoing a debt resolution process through NCLT. 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.
The company says the lead insurer has discharged its GST liability on the entire premium, therefore, there is no need for it to pay GST on the realisation of follower premium. But, the GST department is of the opinion that there is no provision in the GST Act where one registered person can collect and disburse tax on behalf of another, regardless of any co-insurance arrangement. agencies
