The Indian finance ministry has reportedly rejected a request for relief from the insurance industry in relation to goods and services tax (GST) input tax credit violations. The ministry has referred the matter to the Insurance Regulatory and Development Authority of India (IRDAI) and declined to intervene in the issue, according to sources familiar with the matter.
The tax authorities have alleged that insurers are availing input tax credit without the underlying supply of goods and services based on fake invoices from intermediaries, with the evasion total said to be more than INR 20 billion.
The DGGI has issued notices and imposed tax demands on 16 insurance companies and six intermediaries. The insurance industry has defended itself by stating that commissions paid to intermediaries are not uniform, and that the commission cap set by IRDAI is too low.
The Central Board of Indirect Taxes and Customs (CBIC) and the Central Board of Direct Taxes (CBDT) officials have said that they will take strict action where there is a case for “wilful default”.