Reinsurance issues in India set to be discussed in council meeting

Reinsurance issues in India set to be discussed in council meeting | Insurance Business Canada

Insurance News

Reinsurance issues in India set to be discussed in council meeting

Move seeks to address industry practices that have led to non-compliance

Insurance News

By
Kenneth Araullo

The Goods and Services Tax (GST) Council of India is expected to deliberate on GST implications for co-insurance and reinsurance in its forthcoming meeting.

The discussion follows a recommendation from the fitment committee, as indicated by a senior government official in a report from Moneycontrol. The move seeks to address certain industry practices that have led to GST non-compliance, necessitating clearer guidelines.

GST authorities have recently concluded probes into several insurance firms, uncovering tax evasion incidents across three distinct scenarios: excessive commissions to agents, and issues related to co-insurance and reinsurance arrangements. These findings have prompted the issuance of formal notices to the implicated insurance entities.

The official indicated that these insurance-related concerns, now common within the industry, will be reviewed by the GST Council following an examination by the fitment committee. The council’s agenda will include addressing stakeholder representations that have been submitted to GST authorities. It is expected to take place before the end of March.

GST notices for insurers

Notably, the Life Insurance Corporation of India (LIC) was served with a GST notice for Rs 806.3 crore for the fiscal year 2017-18, citing various compliance lapses, including the incorrect reversal of input tax credits linked to reinsurance activities.

Additionally, in 2023, Star Health and Allied Insurance faced a GST demand of Rs 38.99 crore for alleged non-compliance related to premiums collected under co-insurance arrangements from July 2017 to March 2023.

ICICI Lombard General Insurance also received a notice for approximately Rs 1,730 crore in unpaid GST spanning from July 2017 to March 2022. The charges involved non-payment of GST on co-insurance premiums received and on reinsurance premiums ceded to both Indian and foreign reinsurance companies during the specified period.

What are your thoughts on this story? Please feel free to share your comments below.