Latest News

Rs.25,000 crore Tax Evasion! Income Tax issues notice to various Insurance Companies for not paying tax


➡️ Click here to join our Whatsapp Group

The Income Tax Department in India is set to issue tax demand notices totaling Rs. 25,000 crore to various insurance companies by the end of March. These notices are being sent as a result of alleged tax evasion by the firms. The companies are accused of paying excessive commissions to agents and claiming deductions prior to April 1, 2023.

Allegations of Excessive Commissions and Deductions

The tax dispute revolves around the payment of additional commissions to agents and intermediaries by insurance companies. The Income Tax Department claims that these commissions exceeded the limit set by the Insurance Regulatory and Development Authority of India (IRDAI). The department alleges that these extra commissions were paid without any corresponding services being provided.

Additionally, the Income Tax Department is scrutinizing deductions claimed by insurance companies for expenses that may not have been genuine. It is alleged that the companies suppressed their income and showed fake expenditures.

Removal of Caps on Agent Commissions

Starting from April 1, 2023, the IRDAI removed the caps on agent commissions in order to promote transparency in the insurance sector. However, the Income Tax Department contends that some companies paid extra commissions and claimed deductions before this date, which has led to the current tax dispute.

Related Investigation by the Directorate General of GST Intelligence

In a related investigation, the Directorate General of GST Intelligence (DGGI) has issued notices to at least 15 insurance companies, including Bajaj Allianz, Aditya Birla Sun Life Insurance, and HDFC Life Insurance, for allegedly evading tax worth Rs. 2,350 crore in 2023. HDFC Life Insurance has received a show-cause notice from the DGGI demanding Rs. 942 crore in tax for the period between July 2017 and FY22.

According to sources cited by Moneycontrol, there are allegations of fraudulent accounting by insurance companies.

Conclusion

The Income Tax Department in India is taking action against insurance companies for alleged tax evasion. The department is issuing tax demand notices to these companies, totaling Rs. 25,000 crore, by the end of March. The dispute centers around the payment of excessive commissions to agents and intermediaries, as well as the claiming of deductions for expenses that may not have been genuine The removal of caps on agent commissions by the IRDAI from April 1, 2023, is also a factor in this tax dispute. Additionally, the DGGI has issued notices to several insurance companies for alleged tax evasion.

Leave a Reply

Your email address will not be published. Required fields are marked *