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More bicycle firms on GST radar for tax evasion, IT action too likely - GST Station

More bicycle firms on GST radar for tax evasion, IT action too likely

More bicycle firms on GST radar for tax evasion, IT action too likely

    After detecting several cases of GST suppression by some bicycle manufacturers and traders in the city recently, dozens of other firms adopting similar practices to evade tax are on the radar of the central GST (CGST) and state GST (SGST) departments.

    The action on these companies will likely be taken in the coming days as the taxation departments, particularly the CGST, has gathered credible information about the companies indulging in tax evasion. The department has also received anonymous complaints against some companies and these too will be probed.

    Meanwhile, income tax probe too may be requested by the department as in some cases income tax is also being suppressed by businessmen.

    Meanwhile, a source in the department gave an insight about the exact modus operandi of businessmen involved in tax evasion by way of undervaluation of bicycle.

    “The GST on a bicycle is 12 per cent and the cycle companies involved in the malpractice of suppression of the GST are billing their bicycle worth Rs 5,000 at Rs 1,000 to their customers. In the entire process, as per the law, the manufacturer is supposed to charge Rs 600 as GST (12 per cent of Rs 5,000) and pay it to the government. But after under billing, they end up paying only Rs 120 (12 per cent of Rs 1,000) to the government. This is evasion of Rs 520 per bicycle and such persons are billing thousands of bicycles on a daily basis and fleecing the government of lakhs of rupees of tax,” said a source.

    He said: “Along with the GST evasion, these businessmen are also suppressing income tax as when they are billing the bicycle worth Rs 5,000 for Rs 1,000, their customers pay them Rs 1,000 in legitimate manner, while the balance Rs 4,000 is paid through unaccounted cash. Therefore, it is obvious they are filing their income tax returns and paying income tax too as per the sale proceeds shown in their books only and suppressing their actual receipts as well.”

    Apart from the action by departments, there is a chorus in the industry as well for strict action against such businessmen who are involved in the GST evasion as these elements are also hurting the genuine cycle manufacturers by selling their products at cheaper rates thereby reducing the rates after adjusting the evaded GST.

    Source- Times of India.