On February 1, 2025, New India Assurance received an Order under Section 74(1) of the CGST Act, 2017, relating to a tax demand of Rs 849.45 crore from the Directorate General of Goods & Services Tax Intelligence (DGGI), Mumbai. This order is based on a show-cause notice dated August 5, 2024, which alleges that the company failed to pay IGST on Group Health services provided to employees and their family members at Special Economic Zone (SEZ) units from July 1, 2017, to March 31, 2024. These services were consumed by employees, not the SEZ units, triggering the demand.

The demand of Rs 849.45 crore is in addition to applicable interest and penalties under Section 74(1) of the CGST Act, which are also part of the overall tax demand. This legal matter is not isolated, as it pertains to industry-wide issues that have been brought to attention by the DGGI. New India Assurance plans to file a detailed response to the order within the prescribed timelines, based on the advice of its tax consultants. This move aims to highlight the company’s contentions against the demand.

While the legal proceedings are ongoing, the company has acknowledged the potential financial impact, which will be disclosed as a contingent liability in its financial statements. The outcome of this matter could influence future financial planning and operational strategies, depending on the final adjudication.

The case has generated significant attention within the insurance sector and is likely to have broader implications for other companies in the industry facing similar issues. Industry insiders are closely monitoring how this case will unfold and its effect on compliance norms for SEZ operations.

In the meantime, New India Assurance is preparing to present its case and is expected to engage actively with the Adjudicating Authority to defend its position. The company’s response will likely reference relevant GST provisions, as well as the guidance of its legal and tax advisors.

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