Mumbai: Indian consumer finance major Bajaj Finance is under scrutiny of the Directorate General of Goods and Services Tax Intelligence (DGGI) for alleged evasion of Rs 341 taxes to avail exemptions on interests. The consumer finance company faces 100% penalty for alleged ₹341 crore tax evasion from June 2022 to March 2024, ₹150 crore interest, and ₹16 lakh daily interest till final payment of the penalties.
The GST authorities alleged the Non Banking Financial Company (NBFC) providing consumer loans for electronics, mobiles and automobiles willfully mis-declared service and processing charges of consumer loans as interests charges on EMIs to avail exemptions on GST levies.
The taxmen suspect the GST evasion would add up to ₹850 crore. “Intelligence collected reveals that Bajaj Finance Ltd is evading GST by wrongly treating services/processing charges as interest to avail the benefit of exemption provided under central tax rules,” according to the 160-page summons.
The GST sleuths inspected 65 offices of Bajaj Finance for alleged irregularities of customers charged with 'upfront interest' for availing loans on consumer products on EMI.
“The taxpayer failed to correctly self-assess the tax payable on the upfront interest and pay the liability thereof and file GST returns on the same,” sates the summons notice.
The DGGI sleuths alleged the upfront interest is actually a processing fee or service charge, which is taxable but shown as an interest charge to avail tax exemption.
