Income Tax News: Insurance Companies Commit Tax Evasion of Rs 30,000 Cr by Showing Fake Expenses

14 Oct, 2023 Author: Ayushee Joshi

Income Tax Evasion: Tax evasion by some of the country’s largest insurance companies has recently come to light. When the I-T Department and the Directorate General of GST Intelligence (DGGI) launched an inquiry last year, it was revealed that some insurance companies were breaking commission laws and paying more than the allowed amount to agents and mediators. Such payments were made using forged challans. In addition, there are claims that insurance firms received commissions from co-insurance businesses on re-insurance premiums but did not pay taxes.

Notices Sent to Companies

According to estimates from the Income Tax Department, after the implementation of the GST (1st July 2017), insurance companies and agents have engaged in around Rs 30 thousand crores worth of tax evasion by fabricating costs. Due to the significant losses incurred by the Income Tax Department as a result of the enterprises’ increasing expenditure, the department will be sending notices to these organisations. A Tax Demand Notice will reportedly be sent to these companies to collect the outstanding debt. However, if interest and penalties are assessed, this amount will rise even more. Companies will be required by law to respond within the allotted period.