The Directorate General of GST Intelligence (DGGI) has reportedly issued show cause notices to multiple insurance players, including insurtech startups Go Digit and Policybazaar, and HDFC Bank, among others. The notices are part of a widened probe against insurance companies for wrongful claim of input tax credit, which began in 2022, and are said to be centred on invoices raised from 2018 to March 2022, with authorities detecting evasion of INR 2,250 crore.
According to the notices, the companies allegedly issued fake invoices for many insurance companies without providing any service, which is a punishable offence under GST norms. The DGGI is yet to release an official statement on the matter, but an officer cited by ET said that the directorate general’s investigation revealed that many insurance companies availed input tax credit based on fake invoices, prompting the agency to send notices.
At least 120 insurance intermediaries and aggregators are being probed by the DGGI for alleged tax evasion, including the three companies listed above. The authorities claim that these entities formed an arrangement to pass on ineligible input tax credit under the garb of marketing services. They also alleged that these entities raised fraudulent invoices by following a systematic modus in connivance with each other. If found guilty, companies would be liable to a 100% penalty.
This development comes as tax authorities have been looking into startups across multiple industries for suspected tax evasion. Inc42 has reached out to Go Digit and Policybazaar for comment and will update the story accordingly.