DGGI Sends Notice To Go Digit, Policybazaar, HDFC


Directorate General of GST Intelligence (DGGI) in India has issued show cause notices to several insurance players, including insurtech startups Go Digit and Policybazaar, as well as HDFC Bank, among others, for alleged GST evasion. The investigation began in 2022 and reportedly detected evasion of INR 2,250 Cr, focusing on invoices raised from 2018 to March 2022. The notices allegedly claimed that these companies issued fake invoices for many insurance companies without providing any service, which is a punishable offense under GST norms. The DGGI is also investigating at least 120 insurance intermediaries and aggregators for alleged tax evasion. The article also notes that tax authorities in India have been looking into startups across multiple industries for suspected tax evasion. Earlier in the week, the DGGI issued notices to as many as 38 online betting platforms for allegedly laundering money and syphoning off taxes.  As per the article, earlier this week, the DGGI issued notices to 38 online betting platforms for allegedly laundering money and syphoning off taxes, with alleged tax evasion amounting to INR 12,000 Cr. Similarly, in September 2022, the income tax department issued show cause notices to seven online gaming firms and around three dozen high-value players for alleged tax evasion of INR 28,000 Cr. It seems that Indian authorities are cracking down on tax evasion in the startup industry, and multiple companies are under scrutiny.  According to the article, officials claim that the insurance companies under investigation formed an arrangement to pass on ineligible input tax credit as marketing services. The officials also allege that these entities raised fraudulent invoices using a systematic modus operandi in connivance with each other. If found guilty, the companies could be liable to a 100% penalty. It seems that the Indian authorities are taking a tough stance against tax evasion, and companies engaging in such practices could face severe consequences.