Massive Rs 30,000 Crore Tax Evasion Scandal Unveiled in the Insurance Industry

Last updated: 14 October 2023

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A major tax evasion scandal has emerged within the insurance sector, with an internal income tax department assessment revealing nearly £30,000 crore in evaded income tax since July 2017. The investigation, a joint effort with the DGGI, uncovered allegations of suppressed income, fabricated expenditures including fake CSR and inflated advertising bills, and improper commission payments to agents and intermediaries. Banks acting as intermediaries were also found to have had their manpower costs covered by insurers, a violation of tax laws. This has also led to an estimated £3,500 crore in GST evasion due to fraudulent invoices.

A seismic scandal has rocked the insurance industry as an internal income tax department assessment reveals a staggering evasion of nearly ₹30,000 crore in income tax since the inception of the Goods and Services Tax (GST) on July 1, 2017. The alleged wrongdoing centers on insurance companies and their intermediaries who are accused of suppressing income and fabricating expenditures. According to sources within the income tax department, tax demand notices are currently being prepared and wil

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FAQ :

The internal assessment reveals nearly ₹30,000 crore in income tax evasion since July 1, 2017. This amount is expected to rise with the addition of interest and penalties.

The primary allegations include suppressing income, fabricating expenditures such as fake CSR activities and inflated advertising bills, and improper commission payments to agents and intermediaries.

Banks acting as insurance intermediaries were found to have had their manpower supply costs covertly covered by insurance companies, which were not reflected in the banks' financial records, violating income tax laws.

An estimated ₹3,500 crore in GST evasion has been identified, stemming from intermediaries providing counterfeit invoices for claimed input tax credit.

The income tax department is preparing to dispatch tax demand notices, including penalties and interest, to the involved entities. Companies will have time to respond or contest these demands.

The investigation was launched by the income tax department last year in collaboration with the Directorate General of GST Intelligence (DGGI).

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CCI News Desk

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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