GST officers have started sending notices to over a dozen insurance companies for availing input tax credit on the basis of bogus invoices in the last six years, sources said.
These insurers have availed input tax credit (ITC) on the basis of invoices issued by intermediaries for providing services like advertising and marketing, although no such services were actually provided.
As per the GST law, such availment of the ITC is not permissible as the supply of said service did not actually take place.
As per the investigations by the Mumbai unit of the Directorate General of GST Intelligence, ITC of Rs 824 crore has been availed by 16 insurance companies. Out of this, the insurers had voluntarily paid Rs 217 crore.
Sources said notices are being issued to these insurance companies for wrongful availment of ITC.
Investigations revealed that these insurers were actually paying commission beyond IRDAI’s permissible limit to their corporate agents in the garb of expenses related to marketing and brand activation.
The norms with regard to payment of commission to agents and intermediaries have been modified by the insurance regulator IRDAI with effect from April 1, 2023.
The modified norms prescribe an overall limit for management expenses, including commission related expenditure, that an insurer can incur.
Source from: https://www.business-standard.com/india-news/taxmen-issuing-notices-to-insurers-for-availing-tax-credit-on-fake-invoices-123042500961_1.html