THIRUVANANTHAPURAM: Several retailers of electronic goods and home appliances in the state have been resorting to a novel strategy to fleece consumers by covertly passing on the interest rate on no-cost EMI (equated monthly instalment) purchases to the latter, it has emerged.
Separate drives by the state and the central GST departments have detected several incidents where the dealers of electronic goods, home appliances and furniture collected interest sans customers’ knowledge. According to officials, scores of dealers have been booked on charges of wilful attempts to evade tax.
An officer, who was part of the investigation said the dealers collected interest in the guise of processing fees for loans. “As per the agreement with the financial agency and the dealer, the latter has to pay the interest for the item sold under a no-cost EMI plan. Upfront interest and processing fees are the only types of amounts that can be collected from the customers as per the agreement. However, in many cases, the dealers, in connivance with the executives of financing agencies collected interest from the customers without disclosing it.,” he said.
The GST department, however, looks into the tax suppression involved in it. “According to law, if the supplier collects the interest amount from the customer, the value of supply or bill amount should also include the interest charged. This gains significance since the supplier collects input tax credit (ITC) for the interest subvention amount paid by the financing agency,” he added. The central GST department has booked over 25 top retailers, wherein the penalty amount ran into crores.
Cautious purchase
Customers must ask for an original delivery order, an agreement between the dealer and the financing agency, in case of a no-cost EMI purchase. It will have split-ups on the value of goods, interest subvention, processing fees, upfront interest etc. Getting a copy of the document is their right. Often, dealers and executives deliberately do not share the document with the customers and complete formalities by collecting the OTP (One-time password) received on their mobile phones.