After investigating insurers, the Income Tax agency allegedly discovered Rs 15,000 crore in tax fraud

14 Aug 2023 , 02:29 AM

According to news reports, the income tax (I-T) department has concluded its investigation into alleged irregularities in the payment of commissions by insurance companies and discovered evasion of more than Rs 15,000 crore. They estimated that the tax on this will be over Rs 4,500 crore.

The inquiry was carried out by the department’s investigation branch and involved more than 25 insurers and more than 250 companies that were utilized to provide commissions to brokers. According to the listed reports, the results have been communicated to the assessing officers (AOs).

According to one report, ‘assessing officers of the concerned firms and the mid-level entities have been shared with the findings, which detail the alleged evasion, the modus operandi, and the amounts involved.’ ‘The AOs will increase the tax demand, inclusive of interest and penalty,’ according to the findings.

The Directorate General of GST Intelligence (DGGI), in addition to the IT department, looked into the insurers. The tax department was looking into possible tax evasion in breach of Insurance Regulatory and Development Authority of India (IRDAI) regulations while the DGGI was looking into them for making false input tax credit (ITC) applications.

The DGGI has issued show-cause letters to 30 companies since March in an effort to get them to pay more than Rs 4,000 crore in GST. According to sources, these companies have so far paid the GST authorities close to Rs 700 crore and are currently in the process of appealing the DGGI’s move to the adjudicating authority.

The reports stated that the industry believed the DGGI and I-T department’s actions were unfair and that the commission problem was a matter of legal interpretation.

In accordance with Section 131 of the Income Tax Act, which gives the I-T department the authority to conduct investigations, call people to appear in person, and request documentation, the corporations had received notices.

The investigation has shown that the insurers reportedly kept track of payments made to agents through companies connected to them using a list of email IDs with specific workers.

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