NEW DELHI: The Items and Providers Tax (GST) authority has detected alleged misappropriation of enter tax credit score (ITC) price ₹824 crore by 16 insurance coverage corporations who used their intermediaries to difficulty faux invoices, in accordance with a press release issued by the Union finance ministry on Friday.
“Investigations have revealed that enter tax credit score of ₹824 crore has been availed, out of which an quantity of ₹217 crore has been paid voluntarily by these 16 insurance coverage corporations to date,” it stated quoting the Directorate Basic of GST Intelligence (DGGI), Mumbai zonal unit. The investigation was initiated by DGGI, Mumbai. The assertion didn’t disclose the names of the companies.
In the course of the course of investigations, it got here to note that these insurance coverage corporations have availed ITC on the idea of invoices issued by a number of intermediaries for offering companies equivalent to promoting, advertising, and model activation. However, no such companies had really been supplied, it stated.
“Thus, within the absence of any underlying provide, the enter tax credit score availed by the stated insurance coverage corporations, shouldn’t be permissible below the GST legislation,” it stated.
Explaining the modus operandi, it stated: “A number of non-banking monetary corporations (NBFCs) engaged in micro-financing companies are appearing as company brokers of the insurance coverage corporations and are cross-selling their single premium credit score [linked] insurance coverage insurance policies in the midst of their lending enterprise. As per IRDA laws, solely a nominal fee is permitted to company brokers. With the intention to circumvent these laws, the insurance coverage corporations have resorted to acquiring invoices from intermediaries, so as to switch fee (over and above the permissible restrict) to NBFCs for provide of companies of promoting, internet advertising and so forth., whereas there was no underlying provide of companies. In flip, these intermediaries have acquired invoices from NBFCs for such provides.”