Indian authorities issued a $208 million tax demand to a private insurer, the most recent in an increasing number of companies slapped with similar notices as the government strengthens its crackdown on alleged evasion.
ICICI Lombard General Insurance Co Ltd. received the notice for alleged non-payment of goods and services tax, it announced in a stock exchange filing late Wednesday. Multiple others, including major gaming firms, have received comparable orders, amounting to over 500 billion rupees ($6 billion).
The series of demands may potentially damage India’s efforts to attract investment away from China and enhance the established perception that the South Asian nation — which has a history of relentlessly pursuing foreign companies for retrospective and arbitrary tax charges — is a challenging place to conduct business.
This week, Delta Corp. was presented with a tax demand, resulting in a significant decline in its shares. There have been reports that Dream11, backed by Tiger Global, also received a notice, as did the Life Insurance Corp. of India the previous week. The companies intend to appeal.
The notices sent to online gaming companies form part of the legal process, as stated by Sanjay Kumar Agarwal, chairman of the central board of indirect taxes and customs, during a press conference in New Delhi on Thursday.
The allegations and demands also have the potential to spark extensive litigation, further harming India’s $20 billion online gaming industry, which is already battling the government’s decision to levy a goods and service tax of 28% on the sector from next month.
Since the government decided to implement the goods and services levy on online gaming and casinos, more than 100 affected companies have sought changes, requesting that the tax be imposed on platform fees charged by companies to users in order to avoid impacting sales volume.
In September last year, tax authorities demanded 210 billion rupees from Bengaluru-based gaming firm Gameskraft Technologies Pvt. The order was overturned by an Indian court and an appeal is currently pending with the Supreme Court.
