GST Intelligence Investigates at least 10 Mutual Fund Houses for Fraud Expense Claims

The Directorate General of GST Intelligence (DGGI) has sent letters of inquiry to roughly 10-12 mutual fund institutions, asking details of transactions that were determined to be suspicious, as per government sources reported.

According to the GST Intelligence, the fund houses may have booked expenses for which they incorrectly claimed input tax credit (ITC) to decrease their GST due.

As per DGGI, the liability is estimated to be over Rs 500 crore.

The DGGI stated that the accounting irregularities were discovered in the accounting books in 2017 and 2018, when the AMCs claimed ITC on expenses capped at 2.25 percent of assets under management (AUM).

Mutual funds allegedly recorded the costs as capital expenditure in order to collect ITC. According to sources, the GST Intelligence is currently attempting to reclaim these incorrectly claimed credits.