The New India Assurance Co. Ltd. on Tuesday reported that it received a Goods And Services Tax (GST) demand notice for Rs 2,379 crore according to an exchange filing from the company. The order was issued by the Additional Commissioner of Central Goods and Services Tax, Palghar Commissionerate.
The authority flagged failure to pay GST on the premium received as a follower in coinsurance business as well as not paying GST on the commission earned on reinsurance premium paid to reinsurance companies as the reasons.
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The company stated that this would not impact its financial and operational activities.
"There is no impact on financial, operation or other activities of the company pursuant to the receipt of this order as it pertains to Industry wide issue and the clarification issued by the Central Board of Indirect Taxes and Customs with respect to the same," the exchange filing said.
The insurance company cited a Central Board of Indirect Taxes and Customs (CBIC) clarification and the advice of its tax consultants as reasons as to why it has a "strong case to defend on merits."
"The company will be initiating appropriate action against the said order within the prescribed timelines and will be filing appropriate response highlighting the contentions of the Company with the appropriate authority," the filing said.
Shares of The New India Assurance Company closed 0.55% higher at Rs 189.10 apiece on the NSE, compared to a 0.1% fall in the benchmark Nifty. The stock has fallen 17.94% in the last 12 months and 6.63% on a year-to-date basis.
Out of three analysts tracking the company, two have a 'buy' rating on the stock, and one recommends 'hold', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 12.8%.
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