SBI Life Insurance has announced that it has received an order under Section 74 of the CGST Act, 2017 from the Additional Commissioner, Mumbai-East, Maharashtra on February 2, 2025. The order pertains to a GST demand on the entire Rider Premium, instead of taxing the premium based on the Base Product in accordance with Rule 32(4) of the CGST Rules.

Details of the GST Demand and Penalty

The order raises a demand of GST along with the applicable penalty for the period between July 2017 to March 2024. The total amount being demanded is Rs. 39.68 crore, which includes:

• Tax Amount: Rs. 19,84,20,122
• Penalty: Rs. 19,84,20,122
• Total Amount: Rs. 39,68,40,244

The Company has received the order from Maharashtra state, and the GST Authorities are in the process of uploading the order to their respective jurisdictions.

Company’s Plan to Appeal the Decision

SBI Life Insurance has made it clear that it intends to file an appeal before the Competent Authority/Appellate Tribunal to contest the order. The company is proceeding in accordance with the applicable provisions under the Goods and Service Tax Act to challenge the GST demand and penalty.

Impact on SBI Life’s Financial and Operational Activities

While the total Rs. 39.68 crore demand may significantly impact the company’s financials, SBI Life Insurance has not provided any further quantifiable financial loss or operational disruption caused by this issue at this stage. The company has maintained its stance of contesting the order, and stakeholders are awaiting developments on this front.

Conclusion

The GST demand and penalty order placed against SBI Life Insurance is a significant regulatory challenge, with the company preparing to contest the decision through an appeal. Investors and stakeholders will be closely watching the outcome of the legal proceedings, as it may have substantial implications for the company’s financial performance and operational strategies.

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