Life insurers agreed that there have been enquiries about commission paid to corporate agents
Income-tax department is seeking to recover service tax of approximately Rs. 3 billion from many life insurers. The I-T department has alleged that there have been disguised commission payments by life insurers and no levy has been paid on it, according to media reports.
Life insurers agreed that there have been enquiries about commission paid to corporate agents. At present, life insurance industry business is not profitable. But the industry has been promised fiscal benefits by finance ministry in the form of tax breaks.
According to life insurers, the recent heavy penalties imposed by IRDA (Insurance Regulatory and Development Authority) on companies for overpaying commission could have led the action from the tax department, the reports highlighted. Usually, the tax liability is on the corporate agent, but there are provisions under which the IRDA can recover service tax from life insurers.
According to PTI, Birla Sun Life Insurance, Metlife Insurance and Reliance Life Insurance among others have been issued summons by Directorate General of Central Excise Intelligence (DGCEI), the apex intelligence organization functioning under the Central Board of Excise & Customs. New Delhi headquartered DGCEI has sought documents pertaining to sale of insurance policies and commission paid to field associates as part of its probe.
