Bakery, film sector engaged in huge GST evasion in Kerala: officials


Kochi: Massive Goods and Services Tax (GST) evasion by bakeries, supermarkets and movie personalities has been detected in Kerala. According to initial estimates, a huge tax of Rs 14 crore was siphoned off in sales of fried snacks alone.

Fried foods such as banana chips, mix, ‘murukku’ and ‘pakkavada’ rice prepared by local small and micro entrepreneurs attract 5% GST.

However, when the same products are sold by major brands in containers and packages, 12-18% GST is charged. Even though these items are extremely popular in Kerala, the state tax department did not collect a proportional amount as GST.

As a result, inspections were launched by GST’s intelligence service which uncovered major irregularities. In fact, officials found that many of the big brands even evaded the 5% GST applicable to local players.

Main defaulters

Tax evasion by a major hypermarket chain from 2017 to 2021 amounted to Rs 11 crore, officials have said. Two other baking groups siphoned off Rs 1.5 crore each. However, a central Kerala-based bakery group agreed to pay Rs 75 lakh after notice was served, officials added.

Other bakery groups have also informed that they will deposit a total of Rs 2 crore as tax dues after inspection by GST Intelligence in Thiruvananthapuram and Ernakulam districts.

Meanwhile, authorities have taken legal action against the hypermarket chain which evaded Rs 11 crore in taxes.

Few GST registrations in the film sector

Meanwhile, officials have also found that about half of those involved in the film business who have an annual income above Rs 20 lakh have not yet completed the mandatory GST registration.

According to GST rules, people in the film industry involved in acting, music, production, post-production work, dubbing, mixing and other services must pay GST if they earn more than Rs 20 lakh per year.

In order to evade this tax, many film personalities accept cash payments, instead of bank transfers. But it enables large-scale laundering of unaccounted-for money in the cinema sector, according to a recent report submitted by the Enforcement Directorate (ED) at the central Ministry of Finance.

Inspections by the Kerala GST Department have, in fact, confirmed the ED report.

Officials said the film industry stakeholder tax is 18%. Until recently, while producers had to pay GST at the rate of 12%, distributors had to pay 18%. To evade taxes, several distributors changed status and became producers. Finding malpractice, the authorities unified the tax structure at 18 percent.

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