Beneath the GST evasion problem the insurance industry would be asked before the government to resolve the problems. A top representative team that comprises some of the CEOs of leading private sector general insurers has already met Tarun Bajaj, retiring Revenue Secretary, Ministry of Finance (MoF), the representatives of life insurers are preparing to meet Bajaj’s successor Sanjay Malhotra soon post he carries over his new job in December.
A section of insurance officials would have claimed the same was because of the oversight on their portion, the GST evasion furnished depicted the irrelevant dealings in the sector. The same insurance firms would claim for the Input tax credit on the grounds of the invoices provided via distinct intermediaries to furnish the services such as advertising, marketing, and brand activation while no services would have been furnished actually.
Before that the government would state Directorate General of GST Intelligence, Mumbai Zonal Unit initiated investigations against 16 insurance companies on the issue of the claim of ineligible ITC. The investigations through the unit found that the ITC of Rs 824 cr would have been claimed from which Rs 217 cr would have been furnished via these 16 insurance firms.
“In the absence of any underlying supply, the input tax credit availed by the said insurance companies, is not permissible under the GST law,” it articulated.
A meeting is being done by the representative team of the general insurance industry with Bajaj to discuss the concern of the development of their side. Post listening to the insurers, he said that he shall make sure that an effective search against the alleged GST rule breach that people does in the industry would get executed.
No coercive action against the general insurers along with the arrest or summoning of the company CEO via GST enforcing the heads.
On listening to the appeal of CEOs a head of the government mentioned that “normally, the insurance industry has remained law-abiding. All the aspects of the allegations will be looked into. If the insurers have made any payment to any institutions, it will be excluded from the purview of the investigation by the GST authorities.’”
Some of the interruptions were that some of the insurers would be prepared to settle the GST cases by furnishing heavy fines.
On the strategies chosen via the insurers to pay the illegal commission, the government mentioned various non-banking financial companies (NBFCs) that are involved in the mico financing business would act as corporate agents of the insurance firms and is been involved in cross-selling their single premium credit linked insurance policies for their lending business.
As per the IRDA statute, a nominal commission would be allowed to corporate agents “In order to circumvent these regulations, the insurance companies have resorted to obtaining invoices from intermediaries, in order to transfer commission (over and above the permissible limit) to NBFCs, for the supply of services of advertising, web marketing etc., whereas there has been no underlying supply of services. In turn, these intermediaries have received invoices from NBFCs for such supplies,” the government stated.
Read Also: GST Wing Starts Inspections Against Life & Non-life Insurers
The insurance sector forces the GST reduction on health policies to draw more people beneath the platform of insurance. The health sector has become the fastest-growing segment in the insurance sector surpassing the motor segment post-pandemic which arose in March 2020 along with the rise in the cost of medical aid.
