Tax-authorities tighten noose around under-invoicing of Chinese imports
New Delhi, November 14, 2022
Tax authorities suspect a tax evasion of more than Rs 16,000 crore through under-invoicing by businesses from April 2019 to December 2020
Tax authorities in India are investigating under-invoicing of goods imported from China after the trade data highlighted a glaring difference of around $12 billion in the data sourced from China and India, the Economic Times reported.
On comparison, the trade data from the two countries show invoiced imports into the country are far less than exports from China to India. Taking cognizance of the same, the customs authorities have issued tax-evasion notices to 32 importers since September. Tax authorities suspect a tax evasion of more than Rs 16,000 crore through under-invoicing by businesses from April 2019 to December 2020. And more such notices are likely to be issued by the tax authorities in the coming days, the report said.
In a 2019 report, a US-based think tank Global Financial Integrity said that India lost a staggering $13 billion, over Rs 90,000 crore, to trade mis-invoicing and it said most of it relate to imports from China.
According to a senior government official these imports largely involve electronics goods, gadgets, and metals, the Economic Times report said.
Why are electronic goods, gadgets, and metals facing under-invoicing?
To encourage domestic production, the government of India has levied import duties on electronic goods and mobile phones and this increased duty has resulted in increased cases of "under-invoicing" and tax evasion from businesses to dodge customs duties.
According to the official trade data, India imported goods worth $79.16 billion from January to September 2022. While customs data from China showed that country's exports to India stood at $89.99 billion in the same period.
This gap has only increased over the years. For instance, in 2019, this gap stood at $6 billion as India's imports from China stood at $68.35 billion, while China's data showed exports at $74.92 billion. In 2020, this increased to $8 billion in 2020 and $10 billion in 2021, the report said.
However, the industry claims that this gap is a result of the time lag in the delivery of consignments and transactions on the high seas and there is not much to it. Some have also sighted the difference in the interpretation of data by different authorities as a probable reason.
[The Business Standard]