Mumbai: IT department raids Delhi's top Indian Fashion designers, sends industry into a tizzy
Industry sent into a tizzy as first-of-its-kind blitz against top designer stores, most likely over alleged GST evasion, continues
Surprise raids by the Income Tax (I-T) department at the stores of top Indian designers has left the fashion circles spinning all the way from Delhi to Mumbai. In New Delhi, I-T officials raided the stores of Ritu Kumar, Rohit Bal, Tarun Tahiliani, Shantanu and Nikhil Mehra, as well the multi-designer boutique Ensemble. Here in Mumbai, sources said the taxmen are also auditing the books of Ensemble's flagship store at Colaba.
The I-T raids began on Tuesday morning, and took place at designer boutiques across New Delhi. While an I-T department spokesperson confirmed that searches were being conducted in Mumbai, they refused to identify the stores. mid-day, however, has learned from a reliable source that the I-T officials are auditing the books of Ensemble's flagship store at Lion Gate.
Sources in the I-T department said, “A search is being conducted in Mumbai. It is likely to wind up by the end of Wednesday.” The designers could be investigated for tax evasion and cash transactions. Officials remained tight-lipped on the details of the operation, but sources said they were still carrying out multiple searches at showrooms and at the residences of these designers in Delhi on Wednesday night. One of Rohit Bal's staff members said, “We were taken by surprise. They raided all Rohit Bal stores on Tuesday morning. Officials took into custody the sales records and electronic devices of employees, and we were restricted from leaving the premises.”
GST of the issue
It's important to note that this is the first time a raid of this magnitude has been conducted since the introduction of the Goods and Services Tax (GST) in July, last year. “It's likely that the raids are on account of violation of GST rules. Most organisations are struggling with new compliances. The law dictates that you're not allowed to accept more than R2 lakh in cash,” added a designer from the capital who didn't wish to be identified. Insiders said that the I-T sleuths struck around 25 establishments across north and south Delhi. The teams seized sales records and computers and laptops, which will be examined for transaction records.
Cash me if you can
It is common knowledge that the trousseau business is founded on an unspoken understanding between the shopper and designer, since the transaction tends to be on the steeper side. “If a bridal lehenga is priced at R15 lakh, usually, 70 per cent is paid in cash. The rest is settled via cheque or credit card for official purposes,” said a multi-designer boutique owner. The in-house spokespersons for Kumar and Tahiliani refused to comment, adding that it was too early to say anything since the search was still on.
Rs 2 lakh
Maximum cash allowed per transaction
No. of stores raided in Delhi
Inputs by Rahul Mahajani
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