Bakery, film sector engaged in huge GST evasion in Kerala: Officials

Photo: Shutterstock

Kochi: Massive evasion of Goods and Services Tax (GST) by bakeries, supermarkets and film personalities has been detected in Kerala. According to initial estimates, a whopping Rs 14 crore tax has been diverted in the sales of fried snacks alone.

Fried food items such as banana chips, mixture, rice ‘murukku’ and ‘pakkavada’ prepared by small and micro local entrepreneurs attract a GST of five per cent.

However, when the same products are sold by big brands in containers and packets, a GST of 12-18 per cent is charged. Even though these items are extremely popular in Kerala, the state’s taxes department was not collecting a proportional amount as GST.

As a result, inspections were launched by GST Intelligence Department which unearthed major irregularities. In fact, officials found that many of the leading brands evaded even the five-per cent GST applicable to local players.

Major defaulters

A top hypermarket chain’s tax evasion from 2017 to 2021 amounted to Rs 11 crore, said officials. Two other bakery groups siphoned off Rs 1.5 crore each. However, a bakery group based in central Kerala agreed to pay Rs 75 lakh after a notice was served, officials added.

Other bakery groups have also informed that they would deposit a total of Rs 2 crore as tax dues after inspection by GST Intelligence in Thiruvananthapuram and Ernakulam districts.

Meanwhile, the authorities have initiated legal action against the hypermarket chain that evaded Rs 11 crore taxes.

Few GST registrations in film sector

Meanwhile, officials also found that around half of the persons involved in the film sector who have an annual income of more than Rs 20 lakh are yet to carry out the mandatory GST registration.

According to GST rules, people in the film sector involved in acting, music, production, post-production work, dubbing, mixing and other services have to pay GST if they earn over Rs 20 lakh a year.

In order to evade this tax, many film personalities accept payments in cash, instead of bank transfers. But, this enables large-scale laundering of unaccounted money in the cinema sector, said a recent report submitted by the Enforcement Directorate (ED) to the Central Finance Ministry.

The inspections by Kerala’s GST department have, in fact, confirmed the report of the ED.

Officials said that the tax on stakeholders in the film industry is 18 per cent. Till recently, while producers had to pay GST at the rate of 12 per cent, distributors had to shell out 18 per cent. To evade tax, several distributors changed their status and became producers. Noticing the malpractice, the authorities unified the tax structure to 18 per cent.

The comments posted here/below/in the given space are not on behalf of Onmanorama. The person posting the comment will be in sole ownership of its responsibility. According to the central government's IT rules, obscene or offensive statement made against a person, religion, community or nation is a punishable offense, and legal action would be taken against people who indulge in such activities.