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Trichy, Tamil Nadu, India
Working as an Assistant in LIC of India, Rockfort BO, Trichy, TN. Having a strong belief that LIC's welfare is our welfare and always trying to work towards that. Also functioning as an office bearer of AIIEA Thanjavur Division.

Tuesday, March 22, 2011

Pvt insurance firms ‘launder’black money

I-T dept says these companies are getting involved in murky transactions in a bid to capture market share

Two days ago, when the Lokayukta sleuths raided a few officials, they found Bescom assistant executive engineer B N Rajanna paying insurance premiums worth Rs 15 lakh.

 This, however, did not tally with his salary. But the taxmen see a pattern. According to them, private insurance is emerging as a conduit for diverting black money.

“Private insurance companies are big-time into the business of pushing black money into the market, all because of cut-throat competition. In a bid to grab a sizeable chunk of the market share, these firms are entering into murky transactions,” said an I-T department official.

The official said such transactions do not happen with government-backed insurance companies as they insist on ‘know your customer’ kind of information, in which a potential customer is expected to provide all details about himself before he can buy an insurance policy.

He said a recent audit of the accounts of
two reputed companies had found a revenue-investment mismatch to the tune of crores of rupees.

Taxmen say a majority of such insurance transactions do not find a mention in the I-T returns, which amounts to tax evasion. “We have detected tax evasion worth Rs 50 crore in just two cases,” said the official.

The recent Lokayukta raid is a clear example. The Bescom AEE paid premiums worth Rs 15 lakh, which is disproportionate to his official income and the policies were not declared in the I-T returns.

As per the guidelines issued by Insurance Regulatory Development Authority (IRDA), the insurance watchdog, any remittance beyond Rs 50,000 should be done in cheque/DD. Any cheque/DD remittances become official.


For example, a trader has Rs five lakh in black and wants to make it legal. He approaches a private insurance firm agent to invest in a three-year unit-linked policy.

Since the trader cannot issue a cheque/DD, the agent asks him to remit the amount in cash multiples of Rs 50,000 each. Yet, the trader gets a single policy for Rs five lakh. At the end of the term, he withdraws his deposit with interest, which is considered white.

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