Tax authorities have widened an ongoing probe against a few financial-sector companies including insurers and mutual funds, for alleged tax evasion, with both the Goods and Services Tax and the Income Tax departments planning to send more show cause notices to them.
“This is an industry-wide issue that is being investigated by both the income tax and GST officials,” said a senior official, noting that the issue does not fall in the purview of the insurance regulator and is hence being investigated by tax officials.
“The Insurance Regulatory and Development Authority of India may not have the wherewithal to deal with tax evasion problems,” he said, adding that both the indirect and direct tax departments are looking into transactions in the sector. The Directorate General of GST Intelligence is planning to send show cause notices to more insurance companies as well as mutual fund firms for alleged tax evasion by wrongfully availing input tax credit.
“About three to four more show cause notice will be sent out soon and all zonal offices are looking into the issue based on the trends that were found in the investigation,” said another source familiar with the development.
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