NEW DELHI: Fearing ‘tax raj’ many traders have stopped accepting payments through digital platforms in the last quarter of the financial year, even as the Centre is leaving no stone unturned to push for a cashless economy.
Talking to traders in Delhi revealed that they have stopped taking payments through cards and have started dealing mostly in cash to avoid paying more taxes to the I-T department. They fear that the high volume of business dealings through digital mode will reflect in the account book and will show an unusual jump in the business in the last quarter. They are also worried that this will give an opportunity to the tax officials to make the tax assessment of the whole year only on the basis of transactions of last quarter.
Latest figures released by the RBI has also revealed the trend as it says that digital payments fell about 10 per cent in volume terms and 7 per cent in value terms during January 2017 compared with December 2016.
A Karol Bagh-based owner of a cloth shop said that tax evasion is like an open secret. “We are requesting customers to pay in cash. Suppose I sell clothes worth `1 lakh per day and accept all payments through cards then it will show in our account book. Before demonetisation, I would show only 20 per cent of business in white. How will I explain this sudden jump?” he asked.
A Chandni Chowk-based jeweller echoed a similar view, “If you go to any shop, you will see that they have stopped swiping cards. Showing all business in white will mean loss for us.” A Vikas Marg-based trader said that apart from income tax they will also have to pay more VAT after showing all the transactions in ‘white’.
Himanshu Kumar, a Connaught Place-based chartered accountant said, “By showing lesser sells in ‘white’ during last quarter, traders make a balance in their books. Otherwise, they will have to pay more taxes. Moreover, I-T department may also question them for the unusual difference if they do all business through digital mode.”
Explaining further, Kumar said that income tax department might make assessment of the full financial year on the basis of transactions of the last quarter if it is higher due to the jump in ‘white’ transactions.
B M Singh, former chairman, central board of direct taxes said, “I-T officials may ask if the last quarter has so many transactions then why is it less throughout the year.”
While the latest RBI data showed decline in digital transactions, traders and tax experts claimed that it may go down further in February and March. As per data, total number of digital transactions fell to 870.4 million in January from 957.5 million in December. In value terms, the number declined to Rs 97,011.4 billion in January from Rs 1,04,055 billion in December. This data includes digital wallets and mobile banking transactions, electronic fund transfers, and those on credit and debit cards, among other methods such as Unified Payments Interface and Unstructured Supplementary Service Data.