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    DGGI launches probe into 'tax evasion' worth Rs 18k cr by agricultural brokerage houses

    Synopsis

    During a sector-wise analysis of GST data, the DGGI detected evasion by 58 brokerages, engaged in procurement of crops from farmers for businesses and government agencies, and in processing and packaging for exports, said officials. Some of these brokerages were not even registered under GST, despite huge turnover, and action could be initiated against more such entities, they said.

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    New Delhi: The Directorate General of GST Intelligence (DGGI) has initiated a probe into alleged tax evasion of about Rs 18,000 crore by agricultural brokerage houses, officials said, adding that the agency will soon issue notices to these brokerages.

    Farm produce does not attract goods and services tax (GST), but brokerage associated with it is liable to 18% tax.

    During a sector-wise analysis of GST data, the DGGI detected evasion by 58 brokerages, engaged in procurement of crops from farmers for businesses and government agencies, and in processing and packaging for exports, said officials. Some of these brokerages were not even registered under GST, despite huge turnover, and action could be initiated against more such entities, they said. "Even the smallest one in our list had an annual turnover of Rs 50 crore.... estimated evasion would be about Rs 18,000 crore along with penalty and interest for the last four financial years," a senior official told ET on condition of anonymity.

    Zonal officials have also been asked to keep tabs on such brokerage houses at the local level for any instance of tax evasion, the official said. A separate communication has been sent to brokerage houses, asking them to get registered under the GST, according to the official. The alleged evasion is largely connected with the procurement of whole rice and broken rice, pulses, wheat, groundnuts, oilseeds and millets, officials said, adding that these brokerages were not paying tax while functioning as commission agents, which attracts 18% GST, as also for carrying out de-husking, de-seeding, splitting or polishing of grains for a fixed cost per bag. These activities also attract 18% GST.



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