Bajaj Finance
Bajaj Finance receives Rs 341 crore GST ’evasion’ notice from DGGI: Report
Pune/IBNS: Pune-headquartered non-banking financial company Bajaj Finance has received a Rs 341 crore show-cause notice from the Directorate General of Goods and Services Tax Intelligence (DGGI) alleging tax evasion by wrongfully categorising a service charge as an interest charge in an August 3 notice, as per a report by Economic Times.
“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,” the Economic Times report cited the 160-page DGGI notice stating.
Bajaj Finance did not respond to queries, the ET report said.
India Blooms, however, could not independently verify the report.
According to reports, Bajaj Finance, a subsidiary of Bajaj Finserv Ltd, is facing a total fine of around Rs 850 crore — 100 percent penalty for the alleged Rs 341 crore tax evasion, Rs 150 crore of interest, and Rs 16 crore daily interest until payment is completed.
The period for the alleged invasion is June 2022 to March 2024, as per ET report.
The financial company charges 'upfront interest' from those who avail loans to purchase store items, which the DGGI states is a taxable 'processing fee or service charge', reports ET.
However, Bajaj Finance has categorised it as a non-taxable 'interest charge', which the authority has raised an issue with.
“The taxpayer has failed to correctly self-assess the tax payable on the upfront interest and pay the liability thereof and file the GST returns accordingly,” ET reported, quoting the DGGI notice.
The investigation was initiated by GST officials in Kerala after an inspection of the Kozhikode outlet of the 'myG' retail chain in August 2022, as per reports.
The notice stated that 'upfront interest' was charged regardless of the loan amount, which is how 'service charge' is usually applied, according to the ET report.
Executives of Bajaj Finance were summoned by GST officials for details of the charges to customers, and in July, the company's office in Pune's Viman Nagar was inspected, reports ET.
As per the notice, it said, 65 offices of Bajaj Finance Ltd. charged customers with this 'upfront interest'.
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