The Goods and Services Tax (GST) authorities have expanded their investigation into the bogus invoicing case involving insurance intermediaries and aggregators. They have issued summons to several of them in the past two weeks to obtain extensive information. Authorities have asked intermediaries and aggregators to provide the agreements and contracts they have signed with insurance companies, their total input tax credit since 2018-19, and documents to prove that services were rendered.

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The Directorate General of GST Intelligence (DGGI) launched a probe against more than 16 insurance companies for allegedly availing input tax credit fraudulently. The summons was sent just a few weeks after authorities had begun prosecution against a leading insurance intermediary for forging bogus GST invoices worth around Rs 100 crore, reported Business Standard.

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Intermediaries were working in tandem with insurance companies to create fake invoices under the umbrella of marketing and sales spending. Some intermediaries provided partial information, but in many cases, they failed to prove the services rendered against which invoices were raised. The GST authorities recently launched prosecution proceedings against a listed e-intermediary, and the company concerned sought some time to furnish details.

“Chief financial officers of some of these firms were questioned last week. They have been asked to provide a slew of documents related to their tax filing, particularly the revenue these intermediaries received from top insurers of the country,” an official told Business Standard.

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Over 120 insurance intermediaries and aggregators from cities like Mumbai, Gurugram, and Bengaluru are under the lens of the tax department. Once all the data has been handed over by the intermediaries and aggregators, authorities are expected to question insurance companies directly in the matter. The department suspects industry-wide irregularities in paying commissions to their brokerages and intermediaries.

Generating fake invoices is punishable with a five-year in prison. The DGGI's probe found that the insurance firms were allegedly giving as much as 70 percent in commission to intermediaries and offline agents, even when the Insurance Regulatory and Development Authority of India (IRDAI) had set the limit at 15-20 percent. Last year, the DGGI detected tax evasion of Rs 824 crore by 15 life and non-life insurance companies and others as part of its probe.

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(Edited by : Sudarsanan Mani)