September 29, 2023

The Items and Products and services Tax government are investigating 16 insurance coverage corporations for availing ineligible enter tax credit score.

The GST government initiated investigation after knowledge towards ICICI Prudential Insurance coverage Co. surfaced, BQ High has learnt. The corporate voluntarily paid Rs 100 crore right through the investigation and isn’t lately taking a look to contest the fees.

ICICI Prudential did not reply to BQ High’s emailed queries.

The probe printed that the 16 insurance coverage corporations availed ineligible enter tax credit score price Rs 824 crore, consistent with a remark by way of the Ministry of Finance. Of that, they’ve voluntarily paid Rs 217 crore thus far.

The costs come with wrongful declare of enter tax credit score within the absence of underlying provide.

“It has come to note that those insurance coverage corporations have availed enter tax credit score at the foundation of invoices issued by way of a number of intermediaries for offering services and products of promoting, advertising, logo activation, and so on., while no such services and products had in truth been supplied,” the remark mentioned.

Underneath the GST legislation, companies can offset the tax paid on inputs towards the levy on ultimate items and services and products they supply.

Consistent with the ministry remark, the modus operandi concerned non-bank lenders appearing as company brokers of insurance coverage corporations and cross-selling unmarried top class credit score related insurance coverage insurance policies all through their lending industry.

The Insurance coverage Regulatory and Building Authority laws most effective permit nominal fee to company brokers.

On this case, the insurance coverage corporations allegedly acquired invoices from intermediaries to switch fee—over and above the permissible restrict—to NBFCs for offering promoting and internet advertising services and products. However intermediaries had no longer introduced such services and products, the ministry mentioned.

Investigation is on and insurance coverage corporations, middleman advertising and branding corporations, NBFCs and banks in more than one towns are underneath the scanner.