LIC Receives Income Tax Notice Worth ₹7,100 Crore: Know the Full Story

LIC Income Tax Notice: LIC has received an income tax notice amounting to ₹7,100 crore. Terming this demand as erroneous, the company has decided to file an appeal. However, the company asserts that this will have no negative impact on its policyholders or its business operations.

LIC Income Tax Notice: Wednesday evening brought significant news for the Life Insurance Corporation of India (LIC). After the stock markets closed, the company disclosed that it had received a tax demand notice of approximately ₹7,100 crore from the Income Tax Department for the financial year 2021-22.

Why Did LIC Receive the Notice?

Issued by the Income Tax Department on March 25, the notice comprises a principal tax component of ₹6,146.71 crore and interest amounting to ₹953.26 crore. This dispute arose during the assessment process, wherein the department treated certain specific financial transactions as part of the company's income. The technical grounds for this include the inclusion of 'Interim Bonus' in the income calculation, the treatment of losses from the 'Jeevan Suraksha Fund' as income, and the classification of negative reserves as income.

LIC Ready to Contest

LIC has expressed its strong disagreement with this tax demand. The company has made it clear that it will not passively accept this order.

LIC informed the stock exchanges that the order is appealable. The company is fully preparing to challenge this order before the 'Commissioner of Income Tax (Appeals).'
The company has reassured its millions of policyholders that this tax demand will have no bearing on its daily operations or services.

What Do LIC's Financial Figures Reveal?

Amidst the buzz surrounding the tax notice, LIC's financial health remains robust. In the December quarter, the company's net profit surged by an impressive 17.46% to reach ₹12,930.44 crore. Additionally, the company's net premium income rose to ₹1.26 lakh crore—an increase of approximately 18% compared to the previous year. LIC's dominance was evident in the stock market on Wednesday as well, with its shares closing at ₹779.60, up 2.75%. However, over the past year, the stock has witnessed a marginal decline of approximately 1.24%.