New India Assurance lists Rs 7,853 crore tax contingencies

The New India Assurance Company Limited disclosed Rs 7,853.19 crore in stated direct- and indirect-tax contingency components at September 30, 2026, calculated from the filing’s listed amounts. New India Assurance reported Rs 835.28 crore of disputed direct-tax demands without a provision, while indirect-tax demands, interest and penalties listed in the note totalled Rs 7,017.91 crore.

What tax contingencies did New India Assurance disclose?

New India Assurance disclosed Rs 835.28 crore in direct-tax contingent liabilities and Rs 7,017.91 crore in indirect-tax demand, interest and penalty components, giving a calculated total of Rs 7,853.19 crore at September 30, 2026. The filing does not state a Rs 10,615 crore aggregate for these matters; the total is derived from amounts specifically listed in its direct- and indirect-tax notes.

The direct-tax figure concerns income-tax assessments completed through assessment year (AY) 2023-24. New India Assurance identified disputes relating to profit on sale of investments, incurred but not reported (IBNR) and incurred but not enough reported (IBNER) reserves, reinsurance premium ceded outside India, unexpired risk reserves and associated penalties.

The indirect-tax subtotal includes the amounts specified for goods and services tax (GST) cases involving special economic zone policies, co-insurance and reinsurance, salvage settlements, service-tax orders and other GST orders. It includes Rs 1,682.17 crore of stated interest and Rs 1,632.17 crore of stated penalties, so it is not a measure of underlying tax demands alone.

Why did New India Assurance make no direct-tax provision?

New India Assurance made no provision for the Rs 835.28 crore disputed direct-tax demands because management said they were likely to be deleted or substantially reduced. Management based that view on appellate-authority decisions and its interpretation of relevant legal provisions, rather than on final resolution of the cases.

During the quarter ended September 30, 2026, New India Assurance received income-tax refunds of Rs 781.39 crore, including Rs 59.63 crore of interest relating to AY 2022-23. The refunds are a separate disclosed event from the contested demands for assessments completed through AY 2023-24.

From tax year 2026-27, New India Assurance exercised an irrevocable option to use the New Tax Regime under Section 200 of the Income Tax Act, 2025. Its effective corporate tax rate changed to 25.168%, including surcharge and cess, from 34.944% under the earlier regime, a reduction of 9.776 percentage points.

The rate change led New India Assurance to re-measure deferred tax assets and liabilities at 25.168%. That re-measurement resulted in a one-time Rs 61.29 crore reduction in net deferred tax assets, charged to profit and loss for the half year ended September 30, 2026, separately from the Rs 835.28 crore direct-tax contingency.

Which goods and services tax disputes are before the Bombay High Court?

New India Assurance has challenged two GST orders before the Bombay High Court and obtained stays in both matters. The larger case concerns group mediclaim policies issued to special economic zones, with a GST demand of Rs 849.45 crore, a penalty of Rs 849.45 crore and interest of Rs 1,487.27 crore, or Rs 3,186.17 crore in stated components.

The second stayed case concerns GST on co-insurance premium accepted and reinsurance ceded. It carries a GST demand of Rs 2,379.13 crore and a penalty of Rs 237.91 crore, amounting to Rs 2,617.04 crore in disclosed components; the filing does not state a separate interest amount for this matter.

Together, the two Bombay High Court cases account for Rs 5,803.21 crore of the Rs 7,017.91 crore indirect-tax subtotal. New India Assurance also filed a writ petition concerning claims settled on a net-of-salvage basis, involving a GST demand of Rs 70.44 crore and an equal penalty of Rs 70.44 crore.

What other indirect-tax orders has New India Assurance challenged?

New India Assurance received multiple service-tax orders with demands aggregating Rs 240.74 crore and penalties of Rs 181.67 crore, or Rs 422.41 crore combined. It said these orders had been challenged before the appropriate authority, without identifying them as the two stayed Bombay High Court cases.

Separate orders from GST authorities included demands of Rs 230.07 crore, interest of Rs 196.64 crore and penalties of Rs 224.70 crore. Those components total Rs 651.41 crore, and New India Assurance said it had challenged the orders before the appropriate authority.

New India Assurance treated the indirect-tax amounts described in the note as contingent liabilities. The filing does not disclose an expected date for adjudication or a case-by-case management assessment of the likelihood of success for the Rs 7,017.91 crore of listed indirect-tax components.

How do tax losses and credits affect New India Assurance?

New India Assurance carried forward accumulated tax losses of Rs 2,264.37 crore, available for set-off against future taxable income under the Income Tax Act, 2025. The filing does not specify when the losses may be used because utilisation depends on future taxable income and applicable statutory provisions.

The company also reported Minimum Alternate Tax (MAT) credit of Rs 2,721 crore at September 30, 2026, accumulated up to March 31, 2026. The credit is available against future tax liabilities, but utilisation in any tax year cannot exceed 25% of the relevant year’s tax liability.

These losses and credits are not presented as settlements of the tax disputes. The Rs 781.39 crore refund, Rs 61.29 crore deferred-tax charge, Rs 2,264.37 crore accumulated losses and Rs 2,721 crore MAT credit are disclosed as separate tax matters in the September 2026 financial results.

Conclusion

New India Assurance’s filing identifies Rs 7,853.19 crore of stated tax contingency components, with indirect-tax matters of Rs 7,017.91 crore exceeding the Rs 835.28 crore direct-tax contingent liability. The two stayed Bombay High Court cases concerning special economic zone group mediclaim policies and co-insurance and reinsurance transactions account for Rs 5,803.21 crore of the indirect-tax total.

Readers should watch the Bombay High Court proceedings, challenges before other appropriate authorities and appellate outcomes on direct-tax assessments through AY 2023-24. New India Assurance has also adopted a 25.168% effective corporate tax rate from tax year 2026-27, while the use of its Rs 2,264.37 crore tax losses and Rs 2,721 crore MAT credit remains governed by statutory limits.