The matter relates to the claim of input tax credit against supply of services, which the GST authority believes are ineligible for such claims
The D-G of GST Intelligence is currently probing large number of insurance companies and several of their intermediaries and channel partners over fake invoices and wrongly claimed input tax credit
Earlier, some CEOs of life and general insurance industry had met Sanjay Malhotra, revenue secretary in New Delhi to explain the position of their companies in the controversial issue
Mumbai:
HDFC Life Insurance on Friday said it has received a demand notice of more than Rs 942 crore for non-payment of GST.
“HDFC Life Insurance Company has received a show cause cum demand notice from the Directorate General of GST Intelligence, Mumbai Zonal Unit asking the company to show cause why a tax of Rs 942,18,46,028 pertaining to the period July 2017 to FY 2022, should not be demanded from the Company,” HDFC Life said in a regulatory filing.
The matter relates to the claiming of input tax credit against supply of services, which the Directorate of Goods and Services Tax (GST) Intelligence (DGGI) believes are ineligible for such claims, it said.
The D-G of GST Intelligence is currently probing large number of insurance companies across life, general and intermediary segments, and several of their channel partners over fake invoices and wrongly claimed input tax credit(ITC).
The DGGI had launched a probe into insurance companies in 2022 after it found that some of these firms had wrongfully availed input tax credit(ITC) on the basis of invoices issued by several intermediaries for providing services of advertising, marketing, brand activation even when no such services had actually been provided. In the absence of any underlying supply, the ITC was not permissible under the GST law.
This was done to circumvent IRDAI regulations that mandated only nominal commissions to corporate agents. The insurers obtained invoices from these intermediaries for supply of services of advertising, web marketing to transfer higher than permitted commission to NBFCs working as corporate agents.
The total amount involved in the fake invoices and wrongly claimed ITC exceeds Rs 25,000 crore, says industry sources.
For matters involving mass scale frauds, which have haunted some of the reputed players of the Indian insurance industry for sometime now, the investigative wing has recorded the statements of all insurers and respective intermediaries.
It is preparing to issue show cause notices for some players in the insurance industry while some have already been served the notices.
Earlier, some CEOs of life and general insurance industry had met Sanjay Malhotra, revenue secretary, ministry of finance, in New Delhi to explain the position of their companies in the controversial issue.
The government had assured the insurers that there would not be any harassment but proper investigations will continue and fines will be levied by the GST authorities.
The income tax department is also investigating these companies for tax evasions. Together with GST frauds, the total amount involved will cross Rs 50,000 crore, sources pointed out.
`GST and IT departments with their through investigations are making steady progress before serving notices to these companies,” said ministry of finance officials.
Stating that the input tax credit (ITC) case is an industry-wide issue, HDFC Life said the company will be taking appropriate steps in due course to reply to the show cause notice and contest the matter.
“It may be noted that Rs 250 crore has been deposited under protest with the authority (DGGI) in this matter in the past,” the private sector insurer added.
On June 20, HDFC Life had said that the Competition Commission of India has approved HDFC Ltd — one of the promoters of the company — to increase its stake in HDFC Life to more than 50 per cent.
In a filing on Friday, HDFC Life said the Insurance Regulatory and Development Authority of India (IRDAI) has granted its approval for transfer of shares of HDFC Life, from HDFC Ltd to HDFC Bank.
We also wish to inform that IRDAI vide its said letter has also granted its approval for HDFC Limited to acquire additional shares in HDFC Life so as to hold more that 50% of its total share capital,” HDFC Life said.