HDFC Life Insurance gets Rs 1,495.17 crore tax demand notice, firm says ‘demand incorrectly computed’ 

HDFC Life Insurance Company has received a tax demand notice of Rs 1,495.17 crore from the Income Tax department for the assessment year 2021-22, the firm said in a stock exchange filing on June 28. The order also includes a demand of Rs 592.41 crore as interest. 

“While calculating the tax demand there are arithmetical inaccuracies involved. The company is in the process of filing rectification application before 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,” the regulatory filing said. 

The aforesaid order will have no adverse material impact on the financial operations of the company and the same shall be further contested by way of an appeal before the Appellate Authority, according to the exchange filing. 

The tax department alleged that the firm did not consider negative reserves as part of taxable surplus. The shareholders net investment income was classified as ‘income from life insurance business' instead of ‘Income from other sources’, the tax department said. 

Moreover, contribution from shareholders incorrectly claimed as a deduction while computing their profits, the statement said.