Rs 30,000 crore tax heist? The modus operandi of insurers, agents and banks
fake expenditure, ET has reported based on information from a source in the I-T Department. The department is sending tax demand notices to these companies.
It all began when the Goods & Services Tax (GST) authorities informed the Insurance Regulatory and Development Authority of India (IRDAI) last year about alleged malpractices by more than a dozen insurance companies in the allocation of commission to their agents.
The I-T department and the Directorate General of GST Intelligence (DGGI) started probing these companies, the DGGI for allegedly fake input tax credit claims while the I-T department for alleged tax evasion through violation of the IRDA norms on commission payments.
Initially, the I-T department was probing more than 20 insurance firms and about 500 entities linked to their sales agents. But the investigation spread to a few banks too after voluminous suspected transactions came to light.
In April, the I-T department sent notices to two large private banks for alleged malpractices involving commission payments by insurance companies
Some insurance companies were paying overriding commission to banks and other intermediaries on top of the legal commission, ET has reported, citing sources. This had led to concerns over potential exploitation and a rise in management expenses in the insurance industry.
