The Goods and Services Tax (GST) authorities are soon going to complete their probe into availment of ineligible input tax credit and will send out more show-cause notices to private insurance companies, sources said.
“The GST authorities are soon completing the investigation and will then issue show-cause notices. Some notices are already issued. Almost all private insurance companies are under investigation,” an official told Moneycontrol.
In case of insurance companies, the issue is that additional commission is being passed on to the agents where there is no supply.
“The GST authorities have booked cases for recovery of input tax credit on the supplies which are not there. To garner more business, the companies have been giving higher commission to agents. Some recoveries have also been made,” he said.
From April 1, the internal cap on commission has been removed, which can now be within the overall ceiling of expenses. “Going forward, this issue should not arise.”
The Director General of GST Intelligence had detected Rs 824 crore wrongful availment of input tax credit by life and non-life insurance companies.
Minister of State for Finance Pankaj Chaudhary had said that over the last five years, the Central Board of Indirect Taxes and Customs (CBIC) has filed 106 cases of tax evasion involving Rs 7,581.8 crore against insurance companies. About Rs 1,347.2 crore has been recovered in availment of ineligible input tax credit and other cases.
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