ICICI Prudential Life gets service tax demand notice
May, 02nd 2013
ICICI Prudential Life Insurance Company Ltd (ICICI Pru) has received a tax demand of about Rs 136 crore from the revenue department over alleged service tax evasion.
A show-cause-cum-demand notice has been served on this private life insurer by the Directorate General of Central Excise Intelligence (DGCEI), the apex intelligence arm of the Central Board of Excise and Customs.
After verifying the books of the company for financial years – 2007-08 to 2011-12, the DGCEI concluded that the life insurer had violated service tax laws during this period.
Besides falsification of books of account, there has also been non-payment to the exchequer of service tax collected from corporate agents and channel partners, it is alleged.
Also, the commission payouts to channel partners may have been passed off under other accounting heads such as rentals, and administrative costs without having to fork out service tax on them.
When contacted, a spokesperson for ICICI Prudential Life Insurance confirmed receipt of the show-cause notice.
“The department has followed procedure by issuing the show-cause notice. We will respond to the notice within the stipulated time period”, the spokesperson said.
Not only ICICI Prudential Life Insurance, several other private life insurers are under the scanner of the revenue department for alleged service tax evasion.
The bone of contention is the commission payouts of such companies and correct record keeping.
Prior to the current negative list system of service taxation that came into force from last year, commissions paid to insurance agents, channel partners attracted service tax as a specific taxable service.