I-T department discovers Rs 10,000 crore tax evasion by online retailers

The income tax (I-T) department has discovered tax evasion of about Rs 10,000 crore over three years, The Economic Times (ET) reported. The evasion is reported to have been done by online retailers selling products via social media platforms such as Instagram and Facebook. The I-T department has sent notices to 45 brands operating across the country, the report said. Other companies will likely be sent similar notices soon. The said companies were either not paying their taxes or had underreported their incomes, according to The Economic Times.

Talking about the issue, a senior official told the newspaper, "Apart from the large eCommerce companies, we are closely monitoring the shops on Instagram and Facebook and have detected evasion to the tune of about Rs 10,000 crore."

The I-T department sent notices between the last week of October and November 15. These notices are regarding the assessment years from 2020 to 2022, the report said. The official said, "We have sent intimation notices to about 45 such etailers and will send notices to more in the coming months."

The report said that the 45 companies are engaged in apparel, jewellery, footwear, bags, and gift items. The list of companies includes some prominent retailers that leverage social media to reach consumers. Several companies that received I-T notices were also engaged in selling their products abroad.

There are more than 229 million active Instagram users in the country, the most in the world. The company also has the highest number of Facebook users, at more than 314 million. Government officials said that these 45 entities have an impressive turnover, the ET report said.

An official detailed the sales made by these companies and said, "They are just selling via Instagram with just a small shop and warehouses and had turnovers over Rs 110 crore, while they had filed income tax returns of Rs 2 crore."

Most of the payments received by these online retailers were made via UPI, and thus, it was easier for the I-T department to track these transactions.