Tax Evasion by Social Media Sellers

The income tax department is said to have detected tax evasion of nearly Rs 10,000 crore over a three-year period by etailers selling goods via social media platforms such as Instagram and Facebook. The department has sent intimation notices to 45 such pan-India brands with more to follow. They were either not paying tax or had underreported it.

The notices were sent between the last week of October and November 15 and are for assessment years from 2020 to 2022.

The 45 include 17 that sell apparel, 11 that sell jewellery, six that sell footwear and bags, five that sell local fashions, and four that sell home décor and furnishings. The rest sell gifts and other items. The list includes some prominent retailers that use social media to reach a larger audience, with many of them were also sending their products abroad.

India has over 330 million active Instagram users, the most in the world. The country also has the highest number of Facebook users at over 380 million. After Covid, there was a surge in the number of retailers selling goods via these platforms that have high user engagement.

Three Mumbai-based sari e-tailers came on the income tax department’s radar after they sponsored a star-studded fashion show.