It is reported that over a three-year period, the income tax agency discovered approximately Rs 10,000 crore in tax evasion by online retailers who sold their products on social networking sites like Facebook and Instagram.
45 of these pan-Indian brands have received notification notices from the department, and more will be delivered soon.
ET has learned that they were either underreporting it or not paying taxes.
“We are closely monitoring the shops on Instagram and Facebook, aside from the large ecommerce companies, and we have detected evasion to the tune of about Rs 10,000 crore,” a top source told ET.
Notices for assessment years 2020–2022 were sent between the last week of October and November 15.
The official stated that none of these are significant e-commerce businesses and that “we have sent intimation notices to about 45 such retailers and will send notices to more in the coming months.”
Of the forty-five, seventeen are clothing sellers, eleven are jewellery sellers, six are shoe and bag sellers, five are locally designed clothing sellers, and four are home goods and décor sellers. The others offer merchandise and presents. The official mentioned certain well-known retailers on the list who use social media to reach a wider audience without naming them. The guy said that a large number of them were also exporting their goods overseas.
India leads the world in the number of active Instagram users with over 229.5 million. With more than 314 million members, the nation possesses the biggest number of Facebook users.
The number of shops offering products on these highly engaged user-generated platforms increased dramatically after Covid. These 45 entities have a high turnover, according to officials.
The official gave the following example: three Mumbai-based sari e-tailers were investigated by the income tax department after they supported a fashion show attended by a number of famous people.
The official declined to provide more information, saying, “They are just selling via Instagram with just a small shop and warehouses and had turnover of Rs 110 crore, while they had filed the return declaring income of Rs 2 crore.”
The department is also able to track sales numbers because of the digital structure of the economy and payments made through net banking or UPI.
Even while the number of people selling things on social media platforms is rising, most of the time this money is not disclosed and taxes are not paid.
The income tax agency reportedly sent letters to numerous social media influencers in June, according to an article published by ET, for paying zero or “substantially low” tax while collecting large fees from businesses whose items they advertised on social media.
