In a major crackdown on tax evasion, the Income-Tax Department has issued notices to approximately 300 private equity (PE) firms and company promoters over alleged non-payment or underpayment of capital gains tax, according to a report.
Government's Data-Driven Tax Investigation
This action is part of a broader effort to curb tax evasion and avoidance, utilizing advanced data analytics based on financial reports submitted by various entities. A senior official revealed that notices were only sent in cases where the department suspected intentional tax evasion.
"Notices were sent based on available data, and some recipients have responded positively by agreeing to file revised tax returns," the official stated.
Rs 4,200 Crore in Alleged Tax Evasion Identified
The department has reportedly identified nearly Rs 4,200 crore in evaded capital gains tax from profits booked between 2021 and 2024. A significant portion of these investments was linked to sectors such as real estate, startups, fintech, electric vehicle (EV) ventures and solar equipment businesses.
The tax evasion strategies uncovered involved complex transactions, including offer-for-sale mechanisms, cash dealings, gold holdings, real estate purchases and unreported overseas crypto assets.
Example of Evasion in the EV Sector
One notable case involved an investor in an EV company who sold an 8% stake in four separate transactions but failed to report capital gains tax. The discrepancy came to light when the individual later purchased two luxury cars and booked two upscale apartments in the names of their minor children, raising red flags with tax authorities.
Increased Scrutiny on High-Value Transactions
The recent crackdown highlights the government’s increasing reliance on data-driven monitoring to detect discrepancies in financial transactions. Experts believe that the tax department’s enhanced use of AI-driven analytics and information-sharing agreements with global financial institutions will lead to further enforcement actions.
With the government intensifying its focus on tax compliance, private equity firms and investors are advised to ensure accurate capital gains tax reporting to avoid penalties and legal complications.
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