Shares of HDFC Life Insurance Company Ltd will be in focus on Monday morning after the insurer said it has received a show cause cum demand notice from the Directorate General of GST Intelligence, Mumbai Zonal Unit, asking it to show cause why a tax of Rs 942.18 crore, pertaining to the period July 2017 to FY 2022, should not be demanded from the company.
HDFC Life Insurance said the matter relates to the claiming of input tax credit against supply of services, which the authority believes are ineligible for such claims. The insurance company has been advised by its legal and tax counsel that it has a good contestable case, HDFC Life said.
"This is an industry wide issue and the company will be taking appropriate steps in due course to reply to the show cause notice and contest the matter. It may be noted that Rs 250 crore has been deposited under protest with the authority in this matter in the past," HDFC Life said.
Giving updates on recent developments, a company update on stock exchanges, post market hours of Friday, suggested Insurance Regulatory and Development Authority of India (IRDAI) on June 23 granted its approval for transfer of shares of HDFC Life, from HDFC to HDFC Bank in view of the proposed amalgamation. It has also granted its approval for HDFC to acquire additional shares in HDFC Life so as to hold more that 50 per cent of its total share capital.
Earlier, HDFC Life had received approval from Competition Commission of India to the proposed combinations in terms of Section 31(1) of the Competition Act, 2002, for HDFC (one of the promoters) to increase its stake in HDFC Life to more than 50 per cent.
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