The Directorate General of GST Intelligence (DGGI) has sent show cause notices to various Insurance intermediaries and aggregators across the country for issuing fake invoices to claim input tax credit.
They have sent the show cause notices to insurance companies such as Policybazaar, Go Digit insurance, HDFC Bank and alleged that these companies are issued fake invoices without providing any services.
In the last 15 days, DGGI officials have sent these summons and notices to the above intermediaries. Across the country, at least 120 insurance intermediaries and aggregators are under scrutiny of the Department for the same reason.
These activities are considered as punishable offenses under the Goods and Service Tax Act, 2017.
From 2022 onwards, the DGGI had started the investigation related to the evasion and the authorities had found evasion of about 2,250 Crore Rupees based on the invoices collected from 2018 to March 2022.
One of the officials of DGGI said that “Our investigation has revealed that the insurance companies availed input tax credit without the underlying supply of goods and services, based on fake invoices provided by these insurance intermediaries. We have sent notices.”
The official further said that these intermediaries make an arrangement to pass on ineligible Input Tax Credit in the mode of marketing service and make fraudulent invoices.
Tax authorities have also sent summons and notices to insurance companies an d levied tax in some cases. Moreover, the DGGI officials said that Rs 700 Crore has been collected as pre-deposit from these companies and the DGGI had further issued summons to 10 more insurance companies.
The DGGI earlier sent notices to some mutual fund houses too for seeking of their past transactions. In February, the mutual funds booked certain expenditures and they wrongly claimed input tax credit to lower their GST liability.
The official alleged that these mutual funds pertaining to 2017-18. Further, the DGGI found discrepancies in accounting by Asset Management Companies for expenses and it also capped at 2.25 percent of assets under management.
Finally, they alleged that for claiming the credit of mutual funds wrongfully accounted for the scheme of the cost capital expenditure.
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