Winning Bizness Desk
Mumbai. The Directorate General of GST Intelligence has issued a show cause notice of Rs 922.58 crore to Reliance General Insurance, a subsidiary of Anil Ambani's Reliance Capital. DGGI has sent a notice to the company demanding GST of crores of rupees on income. The DGGI has sent four notices to the company demanding GST of Rs 478.84 crore, Rs 359.70 crore, Rs 78.66 crore and Rs 5.38 crore on revenue received from services such as reinsurance and co-insurance. According to a report, the company will have to pay this amount as soon as possible. Reports have said that DGGI has sent GST notices to Reliance General Insurance Company in four separate cases. Out of which, GST demands of Rs 478.84 crore, Rs 359.70 crore, Rs 78.66 crore and Rs 5.38 crore have been made respectively. Importantly, Reliance Capital is saddled with debt and is trying to recover from the company. While Reliance General Insurance Company has a share of about 70 percent of the total value of Reliance Capital.
Notice may affect the valuation of the company
These notices relate to proceeds from reinsurance and co-insurance. Also, the profitable company owns 70 percent of the total value of Reliance Capital. Bankers say that the notice may affect the valuation of the company. Hinduja Group has made an offer of Rs 9,800 crore. Notably, Reliance Capital defaulted on a loan payment of Rs 22,000 crore, after which it was sent for debt resolution in November 2021. DGGI had sent the first show cause notice of Rs 478.74 crore on September 28. DGGI said in this regard that the insurance company collects the revenue and therefore they are also required to pay GST. Subsequently, another GST notice of Rs 359.70 crore was sent by DGGI to Reliance General Insurance.
What Company has said ?
On the other hand, the company said that since the lead insurance company has already paid its share of GST on the entire premium, the company does not need to pay GST on recovery of the follower premium. Third show cause notice of Rs 78.66 crore has been sent by DGGI in the case of availing Input Tax Credit (ITC) without providing underlying services in respect of marketing expenditure during 1st July 2017 to 31st March 2022. However, the company has collected an ITC amount of Rs.10.13 crore. A fourth show-cause notice of Rs 5.38 crore has been sent to the company due to profit from subsidized crop insurance schemes between July 2017 and January 2018.
How much is the total loan?
Reliance Capital has around 20 financial services companies including securities broking, insurance and ARC. On November 30, 2021, the RBI dissolved the board of heavily indebted Reliance Capital and initiated insolvency proceedings against it. In the first round, Torrent Investment had placed the highest bid of Rs 8640 crore for this. Reliance Capital has a debt of around Rs 40,000 crore. Many other companies of Anil Ambani also have huge debts and are currently going through bankruptcy proceedings.
