In a latest revelation the Income Tax Department of India has discovered tax evasion of around INR 10,000 Cr over a period of three years by retailers selling goods via social media platforms such as Instagram and Facebook.
I-T Department Discovers Tax Fraud By Sellers On Social Media Platforms
After this discovery, the income tax department had sent notices to 45 pan-India brands.
In future, more are anticipated to receive notifications for not paying taxes or underreporting, as per a media report.
The already notified 45 brands include 17 in apparel sales, 11 in jewelry, six in footwear and bags, five in local fashions and four in home decor and furnishings.
The rest are engaged in selling gifts and various other items reportedly.
Interestingly, this list comprises well-known retailers, who are leveraging social media to broaden their user base, according to an official.
Not only that, most of them are also shipping their products globally.
How Did This Happen?
Pouring more light on the subject, an official informed, “They are selling via Instagram with just a small shop and warehouses and had a turnover of INR 110 Cr, while they had filed the return declaring income of INR 2 Cr,” while refusing to divulge further details.
It is noteworthy here that these notices were sent between the last week of October and November 15 and are for assessment years from 2020 to 2022.
So far, India has over 385 Mn Facebook users, which is the highest globally, constituting approximately 22.1% of the population.
When it comes to Instagram, again India leads in usage, with over 332 Mn active users, according to a recent report.
It sports that more retailers started using highly engaged platforms to sell their goods after Covid-19.
Thanks to the digitization in the country as the digital economy and payments through UPI or net banking aid the department in monitoring sales figures.
Here readers should note that despite the increasing usage of social media platforms for selling goods, such income is often undeclared, and taxes go unpaid.
While talking about the social media platforms, the Indian Income Tax Department is investigating potential tax non-payment by the Indian units of Apple, Google, and Amazon.
This probe basically focuses on detailed clarifications regarding their transfer pricing practices which was initiated in 2021, with a contemplated tax demand of over INR 5,000 Cr.
The well known players such as Apple India, Amazon Seller Services India, and Google India Digital Services, have faced rejections of their justifications during the investigation.
