DGGI notice to ICICI Lombard; alleges ₹273 cr tax demand

The Directorate General of GST Intelligence (DGGI) has issued a show cause notice to ICICI Lombard General Insurance Company alleging a tax demand of ₹273 crore.

The show cause notice was issued on Tuesday for tax demand along with interest and penalties under the Central Goods and Services Tax Act.

The matter largely relates to an industry-wide issue on the applicability of GST on salvage adjusted and ineligible Input Tax Credit, on motor claims settled, the general insurer says in a stock exchange filing.

"The company has deposited an amount of ₹104 crore under protest, without accepting any liability in this regard. Such amount deposited has been disclosed by way of Notes to Contingent Liability in the Financial Statements of the Company for the financial year ended March 31, 2023," the statement says.

ICICI Lombard says it would file its response against the show cause notice within the prescribed timelines.

Reacting to the notice, shares of ICICI Lombard fell 1.4% to ₹1,386.50 apiece on the National Stock Exchange (NSE). The stock opened at ₹1,410 against its previous closing price of ₹1,415.90. The company's market capitalisation dropped to ₹68,660 crore.

The development comes days after ICICI Bank received approval from the Reserve Bank of India (RBI) to raise its stake in ICICI Lombard General Insurance Company by up to 4% in multiple tranches. India's second-largest private lender currently holds a 48% stake in the general insurer.

ICICI Lombard General Insurance Company reported a net profit of ₹390.4 crore for the quarter ended June, a 12% rise compared to the corresponding period last year. The company had clocked a net profit of ₹349 crore in the year-ago period.

Gross Direct Premium Income (GDPI) of the company stood at ₹6,387 crore in the April-June quarter of FY24 compared to ₹5,370 crore in Q1 FY23, registering a growth of 18.9%, which was higher than the industry growth of 17.9%.

Excluding crop, GDPI growth of the company was 19.2%, which was higher than the industry growth of 17.4% in Q1 FY24.

The combined ratio stood at 103.8% for the reporting quarter as against 104.1% in the same quarter of last year. Excluding the impact of cyclone of ₹35 crore, the combined ratio was 102.9% for the first quarter.

Meanwhile, ICICI Bank clocked a profit after tax of ₹9,648 crore for the April-June quarter, beating analyst estimates. Net interest income (NII) of the private lender increased by 38% year-on-year to ₹18,227 crore for the quarter ended June as against ₹13,210 crore in the corresponding quarter last year. The bank's net interest margin (NIM) stood at 4.78% during the quarter compared with 4.01% in the same quarter last year.