Insurance firms submitted hurriedly made invoices to contest charges of wrongful input tax credit claims by officials, an investigation into instances of alleged Goods and Services Tax (GST) evasion by up to 30 insurers found, The Economic Times (ET) reported on Wednesday.
GST E-way bill is a document used to trace goods in transit to verify the authenticity of input credit claims.
An official was quoted as saying executives of a major insurance firm summoned during the investigation attempted to submit fake e-way bills raised by its vendors to claim the input tax credit. When confronted with the audit reports, the firm agreed to pay at least half the GST demand.
The official added that presenting fake e-way bills is just one of the several methods used by these firms to pay overriding commissions (ORCs) to agents in order to claim ITC.
Also Read: Input tax credit not available for GST paid on CSR work expenses: UP AAR
Sources were quoted as saying that whereas the government’s demand under this taxation head is calculated to be up to Rs 5,000 crore, the 30 firms under the scanner have only paid around Rs 700 crore in GST.
According to the report, HDFC Life has paid Rs 210 crore, ICICI Prudential Rs 190 crore, whereas Bajaj Allianz, Tata AIA, and Aditya Birla Sun Life have paid between Rs 20 and Rs 50 crore each.
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Earlier, HDFC Life and ICICI Prudential Life Insurance had informed exchanges that they received GST demand notices of Rs 942.18 crore and Rs 492.06 crore, respectively. ICICI Prudential Life Insurance deposited Rs 190 crore during the probe, and HDFC Life deposited Rs 50 crore without accepting liability. ICICI Lombard said it had received a notice of demand amounting to Rs 94.14 crore.
Also Read: Under scanner: Insurance companies likely to soon face GST audits
Insurers told ET that tax officials had interviewed vendors and brokers to gather information about the invoices before their visits.