BackMakeMyTrip under scanner for alleged tax evasion of Rs75 crore
The DGCEI has registered a case against the online travel services provider for allegedly not depositing service tax it had collected from customers
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New Delhi: Online travel company MakeMyTrip is facing a probe for alleged service tax evasion of ₹ 75 crore.
The Directorate General of Central Excise Intelligence (DGCEI) has registered a case against the online travel services provider for allegedly not depositing service tax it had collected from customers, officials with knowledge of the matter said. Following the probe, one of the firm’s senior executives was arrested by DGCEI officials and released on bail last week, they said.
The arrest of a MakeMyTrip official was first reported by The Economic Times and Business Standard on 16 January.
When reached for comments, a company spokesperson said the service tax case is an industry issue and it will be contesting the case with appropriate authorities.
“At MakeMyTrip, we strongly believe in an ethical, transparent and compliant corporate culture and abide by all laws and regulations of the country. The service tax case in question is potentially an industry issue that can impact all Online Travel Agents (OTAs)," the spokesperson said. “We have a strong case as advised by our tax advisors and therefore will be contesting the matter with the appropriate authorities. We are extending our full cooperation to the authorities in the investigation. Further, the company official who was detained by the authorities has already been released."
Service tax is charged at the rate of 14.5% (including the 0.5% Swachh Bharat cess).
The DGCEI investigation has found that the company was collecting two types of taxes—service tax on 60% of the rate negotiated by MakeMyTrip with hotels towards renting of rooms and service tax on 10% of the gross value on the customer vouchers by treating themselves as tour operators.
The second category of service tax was being mentioned as MMT (Make My Trip) Tax by the firm, said the officials cited earlier. DGCEI also found that MakeMyTrip was depositing the MMT Tax and not the one collected from customers towards renting of hotel rooms, they said.
MakeMyTrip has collected of ₹ 83 crore (approximately) from October 2010 to September 2015 from customers for the taxable service of renting of hotel rooms, out of which ₹ 67 crore has not been deposited in the government account, the officials said. The estimated alleged evasion of service tax by MakeMyTrip is about ₹ 75 crore.
The firm has so far deposited ₹ 15 crore towards its anticipated service tax liability and has promised to deposit ₹ 10 crore during the hearing of the bail application of its executive, the officials said. PTI
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