I-T Dept says insurance companies, intermediaries evaded tax worth Rs 30,000 crore: Report
The I-T department said its observation is based on an internal income tax department assessment which noted that the insurance companies have suppressed their income and showed fake expenditure.
- Oct 13, 2023,
- Updated Oct 13, 2023 2:44 PM IST
The Income Tax department found insurance companies and intermediaries have allegedly evaded around Rs 30,000 crore in income tax since July 1, 2017, when the Centre adopted the Goods and Services Tax (GST) regime, said a report on Friday.
The I-T department said its observation is based on an internal income tax department assessment which noted that the insurance companies have suppressed their income and showed fake expenditure, reported Economic Times.
Now, the department is in the process of sending tax demand notices to these entities to recover the dues, the report said. The recovery amount could subsequently go up once the department adds the interest and penalties.
"We are sending demand notices along with penalty and interest to companies separately and they will get the mandated time to respond to them or contest them," a senior official in the Income Tax department told ET.
The assessment officer will determine the specific amounts for interest and penalties in this case.
The report further stated that the I-T department is keeping a close eye on 30 insurance companies and 68 tax agents and intermediaries.
“There were also instances of fake CSR expenditure, showing events which never took place and highly inflated advertising and event bills for which we have got all the transaction details,” ET quoted another official as saying.
Last year, the income tax department initiated a probe, together with the Directorate General of GST Intelligence (DGGI), after discovering that some insurance firms were evading GST on commissions, and were paying more than what is permitted to agents and intermediaries.
The payments were made against invoices that the I-T officials termed as fake.
Earlier this week, Reliance General Insurance Company (RGIC) received multiple show-cause notices worth Rs 922.58 crore from DGGI. DGGI has sent the company four notices seeking GST of Rs 478.84 crore, Rs 359.70 crore, Rs 78.66 crore, and Rs 5.38 crore respectively on the revenue generated from services like re-insurance and co-insurance, PTI reported citing sources aware of the matter.
On Wednesday (October 11), the Life Insurance Corporation of India (LIC) said it has received a GST demand order of about Rs 37,000 for paying taxes at 12 per cent instead of 18 per cent for some invoices during the assessment year 2019-2020.
The state taxes officer in Srinagar has charged the company with a GST of Rs 10,462, penalty amounting to Rs 20,000 and interest of Rs 6,382, aggregating to Rs 36,844, the state-owned insurer said in an exchange filing.
LIC had received Income Tax penalty notices of Rs 84 crore in October and Rs 290 crore in September. For the assessment year 2012-13, it was penalised Rs 12.61 crore and it was Rs 33.82 crore for 2018-19. For the assessment year 2019-2020, the penalty amounted to Rs 37.58 crore.
In September, the company received another tax demand for more than Rs 166.75 crore. The interest charged was more than Rs 107.05 crore and the penalty cited above Rs 16.67 crore together amounting to Rs 2,90,49,22,609.
DGGI had also sent notice to Health and Allied Insurance company demanding payment of tax worth Rs 38.99 crore.
In its BSE filing, the insurance firm said: “The Company has received a Show Cause Cum Demand Notice from the Directorate General of GST Intelligence, Mumbai Zonal Unit under Section 74(5) of the Central Goods and Services Tax Act, 2017 (“the Act”), October 6, 2023, alleging a tax demand of Rs 38,99,77,849.”
Besides, Bajaj Allianz General Insurance received a show cause cum demand notice from DGGI, Pune zonal unit, amounting to Rs 1,010 crore.
HDFC Life also encountered a tax demand of Rs 942 crore, followed by ICICI Pru Life with Rs 492 crore and ICICI Lombard with Rs 1,729 crore demand.
Also read: 'Puja samagri is exempt': Centre denies reports of 18% GST on Gangajal
Also read: GST on online gaming, horse racing, and casinos to be applicable from Oct 1, 2023
Also read: GST collection rises 10% to Rs 1.63 lakh cr in September
The Income Tax department found insurance companies and intermediaries have allegedly evaded around Rs 30,000 crore in income tax since July 1, 2017, when the Centre adopted the Goods and Services Tax (GST) regime, said a report on Friday.
The I-T department said its observation is based on an internal income tax department assessment which noted that the insurance companies have suppressed their income and showed fake expenditure, reported Economic Times.
Now, the department is in the process of sending tax demand notices to these entities to recover the dues, the report said. The recovery amount could subsequently go up once the department adds the interest and penalties.
"We are sending demand notices along with penalty and interest to companies separately and they will get the mandated time to respond to them or contest them," a senior official in the Income Tax department told ET.
The assessment officer will determine the specific amounts for interest and penalties in this case.
The report further stated that the I-T department is keeping a close eye on 30 insurance companies and 68 tax agents and intermediaries.
“There were also instances of fake CSR expenditure, showing events which never took place and highly inflated advertising and event bills for which we have got all the transaction details,” ET quoted another official as saying.
Last year, the income tax department initiated a probe, together with the Directorate General of GST Intelligence (DGGI), after discovering that some insurance firms were evading GST on commissions, and were paying more than what is permitted to agents and intermediaries.
The payments were made against invoices that the I-T officials termed as fake.
Earlier this week, Reliance General Insurance Company (RGIC) received multiple show-cause notices worth Rs 922.58 crore from DGGI. DGGI has sent the company four notices seeking GST of Rs 478.84 crore, Rs 359.70 crore, Rs 78.66 crore, and Rs 5.38 crore respectively on the revenue generated from services like re-insurance and co-insurance, PTI reported citing sources aware of the matter.
On Wednesday (October 11), the Life Insurance Corporation of India (LIC) said it has received a GST demand order of about Rs 37,000 for paying taxes at 12 per cent instead of 18 per cent for some invoices during the assessment year 2019-2020.
The state taxes officer in Srinagar has charged the company with a GST of Rs 10,462, penalty amounting to Rs 20,000 and interest of Rs 6,382, aggregating to Rs 36,844, the state-owned insurer said in an exchange filing.
LIC had received Income Tax penalty notices of Rs 84 crore in October and Rs 290 crore in September. For the assessment year 2012-13, it was penalised Rs 12.61 crore and it was Rs 33.82 crore for 2018-19. For the assessment year 2019-2020, the penalty amounted to Rs 37.58 crore.
In September, the company received another tax demand for more than Rs 166.75 crore. The interest charged was more than Rs 107.05 crore and the penalty cited above Rs 16.67 crore together amounting to Rs 2,90,49,22,609.
DGGI had also sent notice to Health and Allied Insurance company demanding payment of tax worth Rs 38.99 crore.
In its BSE filing, the insurance firm said: “The Company has received a Show Cause Cum Demand Notice from the Directorate General of GST Intelligence, Mumbai Zonal Unit under Section 74(5) of the Central Goods and Services Tax Act, 2017 (“the Act”), October 6, 2023, alleging a tax demand of Rs 38,99,77,849.”
Besides, Bajaj Allianz General Insurance received a show cause cum demand notice from DGGI, Pune zonal unit, amounting to Rs 1,010 crore.
HDFC Life also encountered a tax demand of Rs 942 crore, followed by ICICI Pru Life with Rs 492 crore and ICICI Lombard with Rs 1,729 crore demand.
Also read: 'Puja samagri is exempt': Centre denies reports of 18% GST on Gangajal
Also read: GST on online gaming, horse racing, and casinos to be applicable from Oct 1, 2023
Also read: GST collection rises 10% to Rs 1.63 lakh cr in September