In the previous 15 days, DGGI officials have issued summons and notices to these intermediaries. At least 120 insurance brokers and aggregators from throughout the country are being investigated.
The Directorate General of GST Intelligence (DGGI) has issued show-cause warnings to many insurance companies, including HDFC Bank, Go Digit Insurance, and Policybazaar, for creating fictitious invoices in order to collect input tax credits without providing any service. According to The Economic Times, the show-cause warnings delivered by DGGI regional offices claimed that these organizations produced fraudulent invoices for several insurance companies while delivering no service. Such behavior is a punishable offense under GST legislation.
In the previous 15 days, DGGI officials have issued summons and notices to these intermediaries. At least 120 insurance brokers and aggregators from throughout the country are being investigated.
According to the source, the DGGI began its probe in 2022, and authorities have purportedly discovered evasion to the tune of Rs 2,250 crore, focusing on bills raised from 2018 to March 2022.
“Based on fake invoices provided by these insurance intermediaries, our investigation revealed that the insurance companies received input tax credit without the underlying supply of goods and services.” “We’ve issued notices,” an official stated.
In order to claim an input tax credit under the GST law, a buyer must have an invoice on which GST has been paid and must have received the goods or services, according to Rule 16 of the CGST Act, 2017.
According to officials, these firms created an agreement to pass on ineligible Input Tax Credits under the pretense of marketing services, and false invoices were generated.
In a second case, tax authorities said they sent notifications and summonses to insurance companies and recovered revenue in some cases. So far, the official stated that Rs 700 crore in pre-deposits have been collected from these companies. The DGGI has summoned 12 insurance companies, according to officials.
Previously, DGGI addressed notices to approximately 10-12 mutual fund institutions inquiring about their past activities. In February, DGGI stated that these mutual funds had recorded certain expenditures against which they had incorrectly claimed an input tax credit (ITC) to reduce their GST due. According to DGGI, this relates to mutual fund claims in 2017-18, when it discovered anomalies in accounting by Asset Management Companies for expenses, which are limited to 2.25 percent of assets under management (AUM).
It claimed that mutual funds misclassified the scheme of cost as capital expenditure in order to collect these credits. DGGI requested reimbursement for the so-called wrongful ITC claimed by these mutual fund houses.
