Legendary tax thieves are out to sabotage the GST, using conservative tactics to circumvent the country's most modern tax reform, an India Today investigation has found.
Launched on July 1, the goods and services tax, or the GST, aims to unify the nation and its 125 crore people into a single market.
"GST marks the economic integration of India," declared prime minister Narendra Modi during its rollout. "There are 500 taxes and we are getting rid of it. From Ganganagar to Itanagar and Leh to Lakshadweep, it is one nation, one tax."
But a discreet investigation by India Today in the financial capital of Mumbai found businesses had already deployed a range of crooked techniques to subvert the GST.
The network's undercover team discovered various traders in the city markets were selling products on backdated bills.
Businesses dealing in white goods, for instance, were caught on tape issuing defunct VAT vouchers.
For customers at these stores, offers on the outdated levy were too tempting to ignore, given differential between the old and new taxes on consumer durables.
At Mumbai's Arcee Electronics, the store's sales manager was seen luring buyers with cheaper deals under VAT billing on July 3.
"Will you sell this TV set with or without GST?" probed India Today's undercover reporter.
"Without GST," the sales manager at Arcee Electronics replied.
He then showed another LED set at a discount as high as 30 per cent.
"You stand gained," the manager explained. "You'll only be charged 12.5 percent in VAT as before and not the new 18 percent of the GST."
The scene was no different at Mumbai's Kartik Electronics.
"I am giving you the best price," said a salesperson at this store.
"Is it with or without GST?" the reporter asked.
"Without" replied the salesperson. "The bill will be backdated. It won't be current."
For tax authorities though, a nightmare appears to have just begun.
Subhash Varshney, the GST commissioner of the Mumbai zone, promised a crackdown when India Today informed him about this massive subversion of the new tax laws.
"Traders selling products on backdated, kacha bills are evading taxes, involved in illegal acts. Wherever it is happening, we'd send our officers to examine," he cautioned. "Consumers should not entertain such traders because they would be tracked later."
But old habits die hard.
Stern warnings by the taxman aside, kacha bills continue to pose a momentous challenge to effective implementation of the GST, India Today's investigation found.
Owners of Mumbai's Bharti Jewellers appeared to be routinely offering fictitious bills to their customers as a means to evade taxes.
"Don't take pakka (formal) bills. Just pay the cash and you will save 3 percent of the GST," the store owner suggested. It (the kacha bill) will have your name, weight and type (of the purchase). I'd write everything on it," he said.
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