The rapid expansion of digital payments in India has brought a surge in tax evasion cases, particularly among small online merchants. The Directorate General of Goods and Service Tax Intelligence (DGGI) has stepped up efforts, working closely with startups, payment aggregators, and payment gateways to ensure that merchants comply with GST regulations.
Tax Evasion Tactics
Small merchants often register as sellers of low-tax goods but later switch to selling high-tax items like betting or gaming services, leading to significant tax evasion. The DGGI is targeting these deceptive practices, aiming to close loopholes in the system.
Role of Payment Aggregators
While payment aggregators conduct initial due diligence during merchant onboarding, ongoing monitoring remains a challenge. The RBI has drafted guidelines urging payment aggregators to enhance their scrutiny, particularly when there is a shift in transaction patterns.
Fraud Detection Methods
Advanced AI tools are being employed to scan online platforms and ensure that the products being sold match those disclosed to financial institutions. Experts have noted cases where merchants use payment IDs linked to non-related services like laundry or logistics to hide transactions related to betting or crypto activities.
Regulatory Response
The RBI's draft guidelines emphasize continuous monitoring of merchants by payment aggregators. Authorities are also focusing on tracking non-compliant merchants by analyzing transaction data, scanning SKUs, and conducting test transactions to detect and report suspicious activities.
Conclusion
As digital payments continue to grow, the scrutiny on online merchants is expected to intensify. The collaboration between the DGGI, startups, and payment platforms is crucial in ensuring that the digital economy thrives while maintaining robust compliance with tax laws.
CAclubindia
