Background
Goods and Services Tax (GST) authorities have issued notices to over 20 insurance companies, including HDFC Ergo and Star Health, demanding ₹2,000 crore in unpaid GST. These companies allegedly provided services to employees of Special Economic Zone (SEZ) units without paying Integrated GST (IGST).
Investigation Findings
The Directorate of GST Intelligence (DGGI) found that insurers extended group medical insurance cover to SEZ employees and their families, which was not exempt from IGST. This misuse led to the issuance of show-cause notices (SCNs).
Previous Issues
This is not the first instance of the insurance sector facing GST evasion probes. Earlier, around 30 insurance firms received notices over alleged malpractices in commission payments, totaling ₹5,500 crore.
Response and Next Steps
Insurance companies can contest the SCNs before appellate authorities, and potentially higher courts. The companies had cited a Ministry of Commerce and Industry letter for IGST exemption, which the investigation found unrecognized for group health insurance services.
