India has lost $13 billion of tax revenue due to trade misinvoicing in 2016: GFI

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New Delhi, Jun 4 (UNI) India has lost 13 billion dollars as potential tax revenue due to trade misinvoicing in the country in 2016, a report said on Tuesday.

The loss was estimated as equivalent to 5.5 per cent of value of India’s total government revenue collections in 2016, the Global Financial Integrity said in a comprehensive study.

The GFI said in its report that using a trade gap analysis, the GFI was able to break down the estimated potential tax revenue losses to misinvoicing by measuring illicit financial inflows and outflows for both import and export under- and over-invoicing.

The GFI estimated that the value of the trade gap for misinvoiced goods equals 74 billion dollars — 12 per cent of the country’s total trade of 617 billion dollars in 2016.

It was also found that of the total estimated potential lost revenue of 13 billion dollars , approximately 4 billion dollars was due to export misinvoicing and approximately 9 billion dollars was due to import misinvoicing.

The 9 billion dollars in import misinvoicing can be further broken down by uncollected VAT tax (3.4 billion dollars), uncollected customs duties (2 billion dollars), and uncollected corporate income tax (3.6 billion dollars).

The report said that in 2016, some of the Indian imports most at risk for high values of import under-invoicing were edible fruits and nuts, sugars, vehicles and cereals.

In 2016, some of the Indian imports most at risk for high values of import under-invoicing were from imports from US, Australia, South Africa and Ghana, it added.

Looking at both high-risk commodities and high-risk trade partners in 2016, GFI found that under-invoiced imports of edible fruits and nuts from Ghana, mineral fuels from Australia and South Africa and electrical machinery from China were highlighted as potential high-level risks for revenue losses.

In 2016, almost two-thirds of Indian imports that appear to be most at risk for some degree of potential revenues losses are imports from just one country – China, which was by far India’s largest source of imports in 2016.

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