GST sleuths tracking merchants skipping tax via digital payments
merchants due to a spike in cases of tax evasion, people aware of the development told ET.
The Directorate General of Goods and Service Tax Intelligence (DGGI) is working closely with startups, payment aggregators and payment gateways to monitor if merchants are selling the right products with the right GST invoices, they said.
“Tax evasion is very common among small merchants, where they would enlist as a seller of one product which attracts GST at a lower slab, but engage in selling other products which attract higher GST… The tax authorities intend to catch such merchants,” said Wriju Ray, cofounder of Idfy, a Mumbai-based identity verification startup that helps payment aggregators deal with identity frauds.
The government is cracking down on such errant merchants and the Reserve Bank of India (RBI) wants payment aggregators to heighten their vigil on their clients.
Typically, platforms are seen to enlist a merchant as a laundry service or an ecommerce portal, but after a few months it starts offering betting services or gaming services and such, a top executive at a fraud detection platform said. The advantage is that a laundry service will attract a much lower GST compared to a betting service, the person explained.
Authorities need to keep track of such developments and monitor if the right taxes are being paid by the merchants, people cited above said.
While payment aggregators undertake a mandatory due diligence on the merchant at the time of onboarding, industry insiders said continuous monitoring
