The commission paid by insurers to agents has come under tax lens as the income tax department is probing transactions worth over Rs 12,000 crore that could have been routed through shell companies, Economic Times reported.
This comes after the GST authorities had last year informed the regulator about these alleged shell companies being floated to route commissions to agents which is above the cap set by it.
Both life and non-life insurers are allegedly involved in these bogus payments to shell companies, the ET reported quoted a senior government official as saying.
"So, while nearly 15% was paid through legitimate channels, the extra amount was routed to firms and showed as marketing or advertising expenses. These companies raised fake invoices, and GST is the only law which treats a fake invoice as a document," the official told ET.