Expanding investigation into allegedly wrongful claims of input tax credit by insurance companies, the tax authorities are probing a section of automobile dealers who have supposedly generated fake invoices without providing any service, which is a punishable offence under goods and services tax (GST) law. The authorities are learnt to have questioned the car dealers to explain the services they provided general insurance companies. The investigators suspect car dealers pitched for insurance schemes that give them commissions in excess of those insurance regulations permit.
The Insurance Regulatory and Development Authority of India (IRDAI) has issued guidelines that will allow car dealers to become Motor Insurance Service Providers (MISP) and offer the policies of multiple general insurers, says Sanjay Kumar Singh.
This will help expand the distribution channels, said Subhash Chandra Khuntia, chairman of the insurance regulatory and development authority of India.
'Online aggregators offer discounts of 70% to 75%.' 'At a car dealership, the discount is usually in the range of 30% to 35%.'
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