Insurance companies under IT scanner, likely to receive tax notices worth ₹25,000 crore: Report
Feb 9, 2024
Income Tax department is likely to issue demand notices worth ₹25,000 crore to insurance companies for paying higher commissions to intermediaries.
Multiple insurance companies are expected to come under the Income Tax department's scanner for paying higher commissions to intermediaries and claiming higher deductions. The IT department is likely to issue demand notices worth a total of ₹25,000 crore in the coming months, reported Moneycontrol.
According to the MC report, the Central Board of Direct Taxes (CBDT) is doing a reassessment of the tax paid by insurance companies in certain years before April 1, 2023. All the income tax notices will be sent to the insurance companies which paid extra commission during the period, by March this year.
“The CBDT is doing a reassessment of the tax paid by insurance companies in certain years before April 1, 2023. The income tax department is in the process of sending out tax notices. By March-end all the income tax notices will be sent for a quantum of approximately ₹25,000 crore," Moneycontrol quoted an official as saying.
Discrepancies emerged after multiple insurance companies paid extra commissions to agents and intermediaries over and above the limit fixed by the Insurance Regulatory and Development Authority of India (IRDAI).
Last year, life and general insurance companies like Aditya Birla Sun Life Insurance, and Bajaj Allianz received show-cause notices for alleged evasion of GST of ₹2,400 crore.
Several insurance companies are under scanner for evasion. Last year in April, IRDAI lifted the capping limits on commissions paid to agents to increase transparency in the sector.
In November last year, GST officials searched the office of British insurance giant Aviva's Delhi office. The officials also seized documents as part of their investigation into alleged tax evasion. During their visit to Aviva's office, they seized laptops and questioned company officials and senior executives.