A country’s economy depends on taxes, and the Goods and Services Tax (GST), which was adopted in India with high hopes, aims to simplify taxing procedures and increase income. However, recent news stories have drawn attention to a serious problem: the loss of GST money. With a demand notice for a huge $1,728.9 crore in suspected unpaid taxes spanning five years, ICICI Lombard has found itself in the center of the storm among the corporations facing the heat of investigations into alleged tax fraud.
ICICI Lombard is confronted with a huge tax demand of Rs. 1,728.9 crore, according to the government law enforcement agency charged with stopping the leakage of Goods and Services Tax (GST) income. This demand follows allegations that during a five-year period, from July 2017 to March 2022, the insurance behemoth neglected to submit GST totalling this enormous sum.
Concerning GST avoidance, GST Intelligence is looking at 30 insurance businesses. The Directorate General of GST Intelligence said in July that it was looking into 30 insurance businesses for potential GST avoidance, which this news fits within. Notices are already being sent to the remaining 15 firms, and the agency has set a November deadline for concluding the inquiry.
As part of this investigation, 15 companies have already been examined, revealing inconsistencies in input tax credits totaling an enormous $3,500 crore thus far. In September 2022, investigations into alleged breaches of the GST input tax credit by insurance businesses initially came to light.
Similar investigations by the Income Tax Department then arose in January 2023. Additionally targeted was HDFC Life, which was issued a show-cause notice requesting 942 crore in taxes for the time frame covering July 2017 to FY22. a notice was sent on 27 September.
ICICI Lombard plans to respond to the show cause cum demand notice within the specified deadlines, following advice from its tax advisors.
In July, it was announced that the Directorate General of GST Intelligence had finished looking into 15 insurance businesses out of the 30 it was looking into for possible GST cheating, finding input tax credit anomalies of Rs 3,500 crore so far. The remaining 15 are currently receiving notifications, according to persons with knowledge of the situation. By November, the agency had promised to wrap up its investigation.
When ICICI Lombard received a show-cause notice from the Directorate General of GST Intelligence in August requesting 273 crore in taxes, the debate surrounding the bank’s tax problems intensified even more. According to information provided in another stock market announcement, this particular demand refers to GST related to salvage and invalid tax credits related to vehicle insurance claims.
first to report on January 24, 2023, that the Income Tax Department was conducting similar inquiries into possible abuses of the GST input tax credit by insurers, and first to report on September 29, 2022, that this was happening.
On June 23, HDFC Life said that it has got a show-cause notice from DGGI requesting Rs 942 crore in tax for the time period from July 2017 to FY22.Additionally, ICICI Prudential Life Insurance has been notified of a potential GST obligation of around Rs 492 crore.
The Effects of GST Obligation
Similar to this, ICICI Prudential received a notification in June 2023 over an alleged GST debt of Rs 492 crore. Official sources had then disclosed that the central organization tasked with stopping GST income leakage had finished looking into at least six of the 30 insurance companies under investigation and was in the process of sending show-cause warnings to the other 14.
The Effects Of GST Obligation Similar to this, ICICI Prudential received a notification in June 2023 over an alleged GST debt of Rs 492 crore. Then, official sources had disclosed that the central organization tasked with stopping GST income leakage had finished looking into at least six of the 30 insurance companies under investigation and was in the process of issuing show-cause warnings.
HDFC Life and ICICI Prudential Life Insurance each contributed Rs 50 crore and Rs 190 crore to the investigation fund without admitting fault.