SBI Life Insurance Company (NSE:SBIL) Ltd. has received an Income Tax Order from the Faceless Assessment Unit of the Income Tax Department for Assessment Year 2023-24 (FY 2022-23), demanding a tax payment of INR 352.50 crore along with INR 78.50 crore in interest, totaling INR 431 crore.
In a stock exchange filing on March 24, 2025, the company stated that while no penalty was imposed, it strongly disagrees with the demand and intends to contest the order by filing an appeal before the Appellate Authority within the stipulated time frame.
SBI Life Disputes Tax Calculation Errors
SBI Life highlighted that the tax demand was based on incorrect calculations, leading to an erroneous enhancement of both policyholder and shareholder income. The insurer noted that allowable expenses and exemptions were added back to its taxable income, inflating the demand.
Furthermore, the Income Tax Department applied a 30% corporate tax rate, instead of the 12.5% special tax rate applicable to life insurance companies under Section 115B of the Income Tax Act, 1961. This miscalculation significantly increased the tax liability.
Despite the dispute, SBI Life assured investors that the tax order will have no material impact on its financial operations, emphasizing that it will pursue legal recourse to rectify the assessment.
Investors Should Watch SBI Life’s Valuation
While SBI Life remains confident about overturning the tax order, InvestingPro’s fair value feature suggests that the stock is currently overvalued. The fair value of SBI Life is estimated at INR 1,232 per share, indicating a 21.5% downside potential from its current market price (CMP) of INR 1,569.8.
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