SUMMARY
At least 120 insurance intermediaries and aggregators are being probed by the DGGI for alleged tax evasion
Authorities are said to have detected INR 2,250 Cr evasion and are centred on invoices raised from 2018 to March 2022
The development comes as tax authorities have been looking into startups across multiple industries for suspected tax evasion
The Directorate General of GST Intelligence (DGGI) has reportedly served show cause notices to multiple insurance players, including insurtech startups Go Digit and Policybazaar, along with HDFC Bank, among others.
ET reported on Friday (April 14) that the GST directorate general has widened its probe against insurance companies for the wrongful claim of the input tax credit. The investigation started in 2022 and authorities are said to have detected evasion of INR 2,250 Cr and are centred on invoices raised from 2018 to March 2022.
The notices reportedly alleged that these companies issued fake invoices for many insurance companies without providing any service, which is a punishable offence under GST norms.
To be sure, the three companies listed above are not the only ones under scrutiny: at least 120 insurance intermediaries and aggregators are being probed by the DGGI for alleged tax evasion.
Inc42 has reached out to Go Digit and the story will be updated once the company replies.
The DGGI is yet to release an official statement on the matter. An officer cited by ET said the directorate general’s investigation revealed that many insurance companies availed input tax credit based on fake invoices, prompting the agency to send notices.
Per Rule 16 of the CGST Act, 2017, the buyer must have an invoice on which GST has been paid and such a buyer must have received the goods or services to avail of the input tax credit.
However, officials claim that these entities formed an arrangement to pass on ineligible input tax credit under the garb of marketing services. The officials also alleged that these entities raised fraudulent invoices by following a systematic modus in connivance with each other. The official cited by the publication stated that companies would be liable to a 100% penalty if found guilty.
The development comes as tax authorities have been looking into startups across multiple industries for suspected tax evasion.
Earlier this week, the DGGI issued notices to as many as 38 online betting platforms for allegedly laundering money and syphoning off taxes. The authorities alleged tax evasion to the tune of INR 12,000 Cr.
Similarly, the income tax department last September issued show cause notices to seven online gaming firms, as well as about three dozen high-value players active on those gaming platforms for alleged tax evasion to the tune of INR 28,000 Cr.
In December 2022, the government informed the Parliament that the Central Board of Indirect Taxes and Customs (CBIC) was probing gaming companies for alleged GST evasion to the tune of nearly INR 23,000 Cr.
