Income Tax Department Finds Alleged Tax Evasion Worth Rs 15,000 Crore By Insurance Companies: Report
The report quoted an anonymous source stating, “The findings, which detail the alleged evasion, the modus operandi, and the amounts involved, have been shared with assessing officers of the concerned firms and the mid-level entities.”
According to a report by the Economic Times, the probe has now been concluded and the tax to be levied regarding the same will be around Rs 4,500 crore. More than 25 insurers and 250 businesses were investigated by the department in the probe.
The report further noted that the assessment officers will ‘raise the tax demand, inclusive of interest and penalty,’ after examining the findings of the investigation.
The insurers were also investigated by the Directorate General of GST Intelligence (DGGI). The investigation by the tax department looked into alleged tax evasion in violation of the Insurance Regulatory and Development Authority of India (IRDAI), while the DGGI looked into the insurers for allegedly fake input tax credit (ITC) claims.
According to a Moneycontrol report in April, the GST authorities were estimated to conclude their investigation into fake input tax credit claims soon and send out show-cause notices to private companies in the insurance industry.
After the GST authorities went to the regulator in 2022 about the alleged shell companies being used to provide agents with commissions well beyond the cap, insurance entities came into the spotlight for the commission being paid to the agents by the insurers.
The insurance industry has maintained that the GST authorities have misinterpreted the situation. They claim that marketing and sales-related expenses have been categorised as commissions on services by the authorities and this is not correct.
According to a report by Moneycontrol in July, about 15 insurance companies including the likes of HDFC Life Insurance, Aditya Birla Sun Life Insurance, and more were found to be evading GST worth Rs 2,350 crore.
