As part of an investigation involving 16 insurers and over $610 million in unpaid dues, the Indian tax administration has delivered show-cause warnings to Bajaj Allianz Life Insurance and ICICI Prudential Life Insurance for dodging taxes since 2017, as per a Reuters report.
Quoting sources, the Reuters report says that the investigation, which was launched in September of last year, targets the insurance industry's practise of classifying all sales commissions that exceed the regulator-mandated cap as advertising and marketing expenses before claiming a tax refund.
Ever since India imposed the goods and services tax (GST), tax authorities believe that 16 insurance businesses collectively owe the government nearly 50 billion rupees ($610 million) in unpaid taxes, interest, and penalties.
According to two of the sources including a government official, quoted in the report, India's Directorate General of Goods and Services Tax Intelligence (DGGI) is currently delivering show-cause letters to more insurance providers.
In order to learn more about the procedures insurance companies use, the tax authorities have also questioned some banks that function as corporate agents and sell insurance products to their clients.
This includes banks that have bancassurance agreements with ICICI Prudential Life and Bajaj Allianz Life