The Life Insurance Corporation of India (LIC), a state-owned entity, is poised to receive a substantial tax refund amounting to Rs 25,464 crore from the Income Tax Department, covering a span of seven Assessment Years (AYs) from 2012-13 to 2019-20 (excluding 2015-16). The notification is linked to the interim bonus disbursed to policyholders during the mentioned assessment period.
This development comes in the wake of LIC reporting a tax demand of Rs 2,133.67 crore for the seven AYs and Rs 1,395.08 crore for the AY 2015-16 on Thursday.
During all seven AYs, the Income Tax Appellate Tribunal (ITAT) directed the tax department to reassess the matter of interim bonuses, ultimately leading to its disapproval by the department. The tax implication of this disallowance is approximately Rs 2,133 crore.
The official exchange filing from LIC stated, “Pursuant to the issuance of the order giving effect to the order of ITAT, the Income Tax Department has issued intimation for a refund of Rs. 25,464.46 Crore. The ITAT had directed the assessing officer to examine the factual matrix/utilization of surplus and decide in accordance with law with respect to the issue of disallowance/addition on account of interim bonus made in the assessment order. On reconsideration, the Assessing Officer disallowed the same. The tax effect of such disallowance comes to Rs. 2,133.67 Crore.”
In an additional development on Friday, LIC received a tax notice amounting to Rs 1,370.60 crore related to the AY 2011-12.
The insurer clarified its stance by affirming its intention to file an appeal with the Commissioner (Appeals) against all the tax notices. LIC emphasized that these notices would not have a significant impact on the corporation’s financials, operations, or other activities.
This substantial tax refund is expected to contribute positively to LIC’s financial standing, reinforcing its position in the insurance sector.