Taxes worth Rs 58,521 Cr lost due to illegal trade
A report by the Federation of Indian Chambers of Commerce & Industry (FICCI) report said that the exchequer is estimated to have lost Rs 58,521 crore in taxes in 2019-20 due to unlawful trade in goods in 5 key industries, including FMCG, mobile phone, tobacco products and alcohol.
The two highly regulated and taxed industries that are tobacco products and alcoholic beverages, account for nearly 49 percent of the overall tax loss to the government in these five key industries. The tax loss across these sectors stood at Rs 17,074 crore (FMCG packaged foods), Rs 15,262 crore (alcoholic beverages), Rs 13,331 crore (tobacco products), Rs 9,995 crore (FMCG household and personal goods), and Rs 2,859 crore (mobile phones).
The maximum number of jobs (7.94 lakh) were lost due to illicit trade in the FMCG packaged foods industry, followed by tobacco industry (3.7 lakh), FMCG household and personal goods industry (2.989 lakh), alcoholic beverages industry (97,000), and mobile phone industry (35,000).
FICCI has estimated that the size of illicit markets in five industries was Rs 2,60,094 crore for the year 2019-20, with the FMCG industry household and personal goods, and packaged foods together accounting for three-fourths of the total illicit value.
The FMCG packaged foods industry held the highest share of the illicit market at Rs 1,42,284 crore, followed by FMCG household and personal goods at Rs 55,530 crore, alcoholic beverages at Rs 23,466 crores, tobacco products at Rs 22,930 crore, and mobile phones at Rs 15,884 crore
The report suggests that addressing the demand and supply gap of legitimate goods, strengthening the domestic manufacturing sector, increasing awareness among consumers, rationalisation of tariffs to reduce tax arbitrage, creation of a conducive environment for innovation and better international coordination and cooperation are some of the way forwards to deal with the risks of illicit markets in India.
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