In a significant development, the Income Tax Department has levied a substantial penalty of Rs 84 crore on the Life Insurance Corporation (LIC) relating to three assessment years. LIC, a stalwart in the Indian insurance industry, has decided to challenge this decision by filing an appeal against the order.
The breakdown of the penalties imposed by the tax authorities is as follows:
- Assessment Year 2012-13: A penalty of Rs 12.61 crore.
- Assessment Year 2018-19: A hefty penalty of Rs 33.82 crore.
- Assessment Year 2019-20: Another substantial penalty of Rs 37.58 crore.
These penalties have been imposed on the state-owned insurance giant for violations of specific sections of the Income Tax Act, namely, sections 271(1)(c) and 270A. This development follows a notice issued by the Tax Department on September 29, 2023.
LIC, established in 1956 with an initial capital of Rs 5 crore, has grown to become a financial behemoth, boasting an impressive asset base of Rs 45.50 lakh crore. Furthermore, it holds a substantial life fund of Rs 40.81 lakh crore as of March 31, 2023, solidifying its position as a cornerstone of India's insurance and financial landscape.
Prior to this, on September 22, LIC had already made headlines by reporting the receipt of a GST notification amounting to a considerable sum of Rs 290 crore.
However, on the day of this announcement, LIC's financial performance was reflected in the stock market. The closing price of LIC shares on Tuesday was reported at Rs. 645, marking a 0.73 percent decline from the opening price of Rs. 648.10. This dip in share price underscores a broader trend, as LIC's stock has seen a cumulative decrease of over 9% over the course of the year.
Interestingly, LIC shares listed at Rs 867.2 each, representing a significant drop of Rs 81.8 or 8.6 percent from the top end of its offering price range, which was initially set between Rs 902 and Rs 949 per share.
Furthermore, the LIC share price on the NSE (National Stock Exchange) was observed at Rs 872 per unit, with a notable discount of Rs 77 or 8.1 percent.
This financial news also coincided with broader market movements. The 30-share BSE Sensex experienced a decline of 316.31 points, equivalent to 0.48 percent, ultimately settling at 65,512.10. Similarly, the NSE Nifty, which encompasses a wider spectrum of stocks, saw a drop of 109.55 points, equivalent to 0.56 percent, closing at 19,528.75.
As the Income Tax Department's penalty decision reverberates through financial circles, LIC's decision to appeal underscores its commitment to defending its financial standing in the face of these challenges. Meanwhile, investors and market watchers continue to closely monitor the evolving dynamics in India's financial sector.
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