NEW DELHI: India’s tax authority has despatched Bajaj Allianz Life insurance coverage and ICICI Prudential Life Insurance show-cause notices for evading taxes since 2017, as a part of a probe spanning 16 insurers and about $610 million in unpaid dues, 3 resources mentioned.
The probe, began in September ultimate yr, is a crackdown at the insurance coverage business’s apply of accounting for all gross sales commissions above the regulator-prescribed prohibit as promoting and advertising prices, after which claiming tax credit, two of the resources mentioned.
Tax government estimate that 16 insurance coverage corporations in all owe the federal government about 50 billion rupees ($610 million) in unpaid taxes, pastime and consequences since July 2017, when India carried out the products and products and services tax (GST), two resources mentioned.
India’s Directorate General of Goods and Services Tax Intelligence (DGGI) is within the technique of sending show-cause notices to different insurance coverage corporations as neatly, mentioned two resources, together with a central authority respectable.
Bajaj Allianz, ICICI Prudential and India’s finance ministry didn’t reply to Reuters’ request for remark. All the resources requested to not be named as they don’t seem to be approved to talk to the media.
However, the case may well be with out advantage if the business regulator–the Insurance Regulatory and Development Authority of India (IRDAI)–backdates a brand new rule round commissions.
The IRDAI has, efficient April 1, got rid of separate limits for commissions and has imposed an total ceiling on working bills and commissions.
The insurance coverage business is calling the regulator to make this variation retrospectively, two resources mentioned. If that occurs, the case will not dangle floor, the resources added.
As a part of its probe, the tax government have additionally puzzled some banks that, as company brokers, promote insurance coverage insurance policies to their shoppers, to ascertain the practices being adopted through insurance coverage corporations.
These come with banks that experience bancassurance partnership with ICICI Prudential and Bajaj Allianz, mentioned the 3rd supply.
However, since banks pay tax on products and services they avail through issuing expenses, they might not be dragged additional into the investigation, mentioned the 3rd supply.
The probe, began in September ultimate yr, is a crackdown at the insurance coverage business’s apply of accounting for all gross sales commissions above the regulator-prescribed prohibit as promoting and advertising prices, after which claiming tax credit, two of the resources mentioned.
Tax government estimate that 16 insurance coverage corporations in all owe the federal government about 50 billion rupees ($610 million) in unpaid taxes, pastime and consequences since July 2017, when India carried out the products and products and services tax (GST), two resources mentioned.
India’s Directorate General of Goods and Services Tax Intelligence (DGGI) is within the technique of sending show-cause notices to different insurance coverage corporations as neatly, mentioned two resources, together with a central authority respectable.
Bajaj Allianz, ICICI Prudential and India’s finance ministry didn’t reply to Reuters’ request for remark. All the resources requested to not be named as they don’t seem to be approved to talk to the media.
However, the case may well be with out advantage if the business regulator–the Insurance Regulatory and Development Authority of India (IRDAI)–backdates a brand new rule round commissions.
The IRDAI has, efficient April 1, got rid of separate limits for commissions and has imposed an total ceiling on working bills and commissions.
The insurance coverage business is calling the regulator to make this variation retrospectively, two resources mentioned. If that occurs, the case will not dangle floor, the resources added.
As a part of its probe, the tax government have additionally puzzled some banks that, as company brokers, promote insurance coverage insurance policies to their shoppers, to ascertain the practices being adopted through insurance coverage corporations.
These come with banks that experience bancassurance partnership with ICICI Prudential and Bajaj Allianz, mentioned the 3rd supply.
However, since banks pay tax on products and services they avail through issuing expenses, they might not be dragged additional into the investigation, mentioned the 3rd supply.