HDFC Bank, Go Digit, Policybazaar Get Notices From DGGI Over Tax Evasion Worth Rs 2,250 crore

The Directorate General of GST Intelligence (DGGI) has sent show-cause notices to some insurance companies, including HDFC Bank, Go Digit Insurance, and Policybazaar, for faking invoices in order to claim input tax credit without providing any service as per The Economic Times report.

Under GST law, issuing faking invoices is a punishable offence, which DGGI show-cause notices claims that these companies did this offence. In the last 15 days the officials sent out summons and notices to these companies. At least 120 insurance intermediaries and aggregators from across the country are under the radar of DGGI.

As per the report the investigation began in 2022 and authorities have reportedly found evasion to the tune of Rs 2,250 crore and are focused on invoices raised from 2018 to March 2022.

"Our investigation has revealed that the insurance companies availed input tax credit without the underlying supply of goods and services, based on fake invoices provided by these insurance intermediaries. We have sent notices," an official said.

As per the GST law, under Rule 16 of the CGST Act, 2017, a buyer must have an invoice on which GST has been paid, and such a buyer must have received the goods or services, for availing of input tax credit.

Officials said that these entities would pass on ineligible Input Tax Credit in the disguise of marketing services and fraudulent invoices were produced.

For another case, the tax authorities make tax recovery from some companies after sending out summons and notices to 12 insurance. As per the official, Rs 700 crore had been collected as pre-deposit from these companies.

Besides, DGGI has sent notices to about 10-12 mutual fund houses also earlier, seeking details of their past transactions. In February, DGGI said these mutual funds have booked certain expenditures, against which they have falsely claimed input tax credit (ITC) to lower their GST liability. DGGI alleged that it is relating to mutual funds claims in 2017-18, where it found discrepancies in accounting by Asset Management Companies for expenses, capped at 2.25% of assets under management (AUM).

DGGI pointed out that mutual funds wrongfully accounted for the scheme of cost as capital expenditure to claim these credits. It has sought recovery of the so-called wrongful claimed ITC by these mutual fund houses.