Caught in a tax whirlwind! ICICI Lombard slapped with astronomical GST demand. Here's the scoop... On August 8, 2023, ICICI Lombard General Insurance received a show-cause notice from the Directorate General of GST Intelligence (DGGI) demanding Rs 273 crore in taxes.

The demand relates to GST on salvage and ineligible tax credit for motor insurance claims.

ICICI Lombard has deposited Rs 104 crore in response to the show-cause notice, but has done so under protest, without admitting any liability. The company has said that it believes that the DGGI's demand is incorrect and that it will be filing a detailed response to the notice.

Salvage is the value of a damaged vehicle that can be recovered after a motor accident. Ineligible input tax credit is the GST that a company can claim on expenses that are not eligible for ITC, such as the cost of buying a vehicle that is later written off in an accident.

The matter is still under investigation, and it is not yet clear whether ICICI Lombard will be required to pay the full amount of the demand.

However, the case has raised concerns in the insurance industry about the interpretation of GST law and the potential for large tax liabilities for insurers.

The company has also said that it will be taking steps to recover the amount from its customers, which could lead to higher premiums for motor insurance in India.