HDFC Life Insurance Company announced that it has received Income Tax order for tax demand and interest aggregating to Rs 2,087.58 crore from the Assistant Commissioner of Income Tax, Central Circle, Mumbai.
The order pertains to the assessment year 2021-22 which includes a tax demand of Rs 1,495.17 crore along with interest of Rs 592.41 crore.The allegations stated in order includes negative reserves not being considered as part of taxable surplus; shareholders net investment income classified as income from life insurance business instead of income from other sources; certain incomes should not be claimed as exempt under Section10; contribution from shareholders' incorrectly claimed as a deduction while computing shareholders' profits; proportionate disallowance as per section 14A read with rule 8D not made and finally certain marketing and advertising expense in financials considered as admissible expense incorrectly while calculating the taxable surplus in policyholder's account.
The major issues raised in the assessment order as mentioned above are covered by orders of the Income Tax Appellate Tribunal, Mumbai and Commissioner of Income tax (Appeals) in own case for earlier years which was already disclosed vide disclosure of pending litigations/ disputes made on 14 August 2023 and 9 November 2023, respectively.
The insurer stated that tax demand and applicable interest has been incorrectly computed by the Department and it is in the process of filing a rectification application before the Tax Authority. The tax demand and interest mentioned in the said order would be reduced post passing of the rectification order by the Tax Authority.
Post passing of the rectification order, the rectified tax demand shall be approximately Rs 1,141.09 crore and interest shall be recomputed accordingly.
HDFC Life Insurance Company is a leading, listed, long-term life insurance solutions provider in India, offering a range of individual and group insurance solutions that meet various customer needs such as protection, pension, savings, investment, annuity, and health. The company has more than 80 products (including individual and group products) and optional riders in its portfolio, catering to a diverse range of customer needs.
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HDFC Life Insurance Company's standalone net profit jumped 14.77% to Rs 411.66 crore on 5.46% rise in net premium income to Rs 20,488.11 crore in Q4 FY24 over Q4 FY23. Net income from investments stood at Rs 7,251.41 crore in Q4 FY24, steeply higher from Rs 1,189.52 crore in Q4 FY24.
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