Bajaj Allianz, Sun Life, HDFC Life, and others found to evade Rs 2,350 crore GST

The investigation on 15 insurance companies stands completed.

As many as 15 insurance companies, including Bajaj Allianz, Aditya Birla Sun Life Insurance, HDFC Life Insurance along with some public insurers have been found to evade Rs 2,350 crore of Goods and Service Tax (GST).

According to a senior government official, the investigation has been concluded for a list of renowned insurance companies. Among these, some public insurers have been found to evade GST. The list comprises 15 companies, encompassing both life and general insurance, to whom show cause notices are currently being issued.

“The investigation on 15 insurance companies, which includes mutual funds, banks has been completed. Tax evasion worth Rs 2,350 crore has been detected in these 15 companies. Rs 700 crore has been recovered so far. There are some public sector insurance companies also on this list. Bajaj Allianz, Sun Life, Hdfc Life Insurance, all the well-known ones are there,” the official told Moneycontrol.

The investigation for claiming fake input tax credit without the underlying supply of goods and services is being carried out by the GST authorities on 15 life and 15 general insurance companies. Out of these, investigations on 15 insurance companies have been completed.

“The investigation includes both private as well as public sector insurance companies, it’s a mixed lot. Show cause notices have been issued to some while to others it will be issued soon. The remaining 15 insurance companies are still under investigation,” he said.

In the case of insurance companies, the issue was that additional commission was being passed on to the agents where there is no supply. To garner more business, the companies have been giving higher commissions to agents. The GST authorities thus booked cases for recovery of the input tax credit on the supplies which are not there.

The matter was referred to the Insurance Regulatory and Development Authority of India (IRDAI) which removed the internal cap on commission. The commission can now be within the overall ceiling of expenses.

Moneycontrol has reached out to HDFC Life, Sun Life, Bajaj Allianz and Finance Ministry for their responses which will be updated here in the story as and when received.

HDFC Life Insurance in an intimation to stock exchanges on June 23 had said that it received a notice from the Directorate  General of GST Intelligence, Mumbai Zonal Unit (the Authority) asking the  company to show cause why a tax of Rs 942.18 crore pertaining to the period July 2017 to FY 2022, should not be demanded from it.
"The matter relates to the claiming of input tax credit against supply of services, which the Authority believes are ineligible for such claims. The company has been advised by its legal and tax counsel that it has a good contestable case. This is an industry wide issue and the company will be taking appropriate steps in due course to reply to the show cause notice and contest the matter. It may be noted that Rs 250 crore has been deposited under protest with the Authority in this matter in the past," HDFC Life Insurance had said earlier.

Online Gaming

In the case of GST evasion by online gaming companies, the official said that there are about 40 which are currently under investigation.

"The GST authorities have not quantified the amount of evasion yet for these 40 online gaming companies,” he said.

Bengaluru-based Gameskraft Technology was issued a GST evasion notice of Rs 21,000 crore on September 8, 2022. The notice pertains to GST (goods and services tax) payments between 2017 and June 30, 2022. The authorities said that the online gaming company allowed many games on its platform in which betting was involved and thus 28 percent tax was payable on it.

Tax evasion has allegedly also occurred as the GST laws on it were not clear yet. The GST Council in its 50th meeting has now approved a 28 percent rate on full face value on all online games irrespective of skill or chance.

The ongoing investigations pertain to the earlier GST payments made by these online gaming companies.

There will be no restraint shown to other online gaming companies while issuing showcause notices. The GST intelligence wing had taken a stand in the case of Gameskraft. So, a uniform stand will be taken as part of an ongoing investigation on their earlier GST payments, another official had told Moneycontrol earlier.