The Star Health and Allied Insurance Co Ltd has been served with 25 tax demand notices amounting to Rs 49 crore by the Goods and Services Tax (GST) authorities across multiple states. The demands are related to alleged violations of GST laws in connection with coinsurance transactions.
The notices were received by the company from different GST authorities, including those in Delhi, Maharashtra, Kerala, and Tamil Nadu, among others. The demand includes interest and penalties, with some of the demands dating back to 2017.
Coinsurance transactions involve insurance companies partnering with other companies to provide insurance coverage to their customers. In these transactions, the two companies split the risk and premiums. However, GST authorities have raised concerns that some insurance companies, including Star Health, are misclassifying these transactions as “insurance” rather than “service” to avoid paying GST.
Star Health has reportedly filed appeals against some of the notices and is also exploring options to settle the disputed amount. The company has stated that it has always been in compliance with GST laws and has paid GST on all its transactions. However, the authorities have alleged that the company has violated the laws by misclassifying its transactions and not paying the correct amount of GST.
The development has raised concerns about the impact on the insurance industry as a whole. Industry experts have expressed concerns that the notices could lead to a increase in the cost of insurance premiums for customers. The Insurance Regulatory and Development Authority of India (IRDAI) has also been approached to intervene in the matter.