The office of director general of GST intelligence, Mumbai zonal unit, in its statement has revealed about unearthing of misappropriation of input tax credit for Rs. 824 crores, without any underlying supply of goods and services, by 16 insurance companies. whose names have not been revealed.
How probe commenced?
This probe has commenced on specific information against ICICI prudential insurance availing ineligible credit.
Entities involved:
Insurance companies, NBFCs, intermediary marketing companies.
Search details :
The officials of DGGI, Mumbai zonal unit has conducted search in premises of NBFCs, insurance companies. branding companies & banks across in multiple cities.
Response from Entities:
During the course of probe itself, various insurance companies involved in this matter also said to have paid total of Rs. 217 crores in cash under 74(5) of CGST Act 2017,
These entities i.e. insurance companies and the intermediaries have formed an arrangement where the intermediaries like NBFCs in the course of money lending business, were acting as corporate agents of insurance companies and selling the single premium linked policies.
Since only nominal commission to corporate agents is permitted as per IRDA rules, in order to by pass the rules and make payment besides the permissible limit, the said insurance companies have taken fraudulent invoices from the intermediaries and advertising company, for supply of services like Advertising, web marketing, brand promotion etc that were never rendered & also have been availing
ITC credit based on invoices, which is not permissible under GST law.
Ministry Of Finance through PIB has made a official press-release about this GST Fraud and has mentioned that further investigations are underway.