The Mumbai income tax department is investigating a staggering Rs 30,725 crore of potential income tax evasion facilitated by a group of city-based agents supplying fake bills to traders and small manufacturers.
The tip-off came from the sales tax department of the state government which came across over 2,000 such agents who supply these bills operating from Girgaum and Kalbadevi areas of Mumbai.
Based on the information, the income tax department is planning the largest ever sweep of traders and small-time manufacturers for tax evasion in India's richest revenue jurisdiction.
The department has landed on this treasure trove through the back-end IT platform created for Goods and Services Tax (GST), which has begun matching sales with income tax returns.
The agents provide false invoices for the traders and manufacturers to mask their profit from their sales.
An official told The Indian Express that the frauds came into light when assesses uploaded their audited accounts along with annexures of purchase and sales on the sales tax department website.
When the department turned over the data to the income tax department as envisaged under the proposed Goods and Services Tax regime the discrepancies between the sales and purchases started to roll out.
As of now, the two departments have found 42,315 such records which have been put under the scanner.
The papers have been used by the traders and manufacturers even for procuring loans from banks. Sectors including iron and steel, paper and chemicals are most susceptible to the fraud, the official added.
Of these, nearly 10,000 cases have been sent to the various intelligence departments in the revenue machinery for investigation.
Stunned by the scale of evasion which has brought both the direct and indirect tax departments in into play, the Central Economic Intelligence Bureau has written to the chief secretaries of all states to detect similar frauds.
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