Income Tax Raids at Fintech Firm; ₹ 500-Crore Illegally Sent Abroad

This came to light after the Income Tax Department conducted search operations at the company on 9 November.

A Fintech company that provides instant short term personal loans via its mobile app has been found to have repatriated "non-genuine" funds running to almost ₹ 500 crore outside India, the Central Board of Direct Taxes (CBDT) said on Wednesday, 17 November.

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A Fintech company that provides instant short term personal loans via its mobile app has been found to have repatriated "non-genuine" funds running to almost ₹ 500 crore outside India, the Central Board of Direct Taxes (CBDT) said on Wednesday, 17 November, news agency PTI reported.

This came to light after the Income Tax Department conducted search operations at the company 's business and residential premises in Delhi and at Haryana's Gurgaon on 9 November, IANS reported.

'Company Was Allegedly Charging High Processing Fee at The Time of Loan Disbursements'

During the search, it was revealed that the company has been allegedly charging very high processing fee at the time of disbursement of loans. This results into effective higher burden of compensation on the borrowers, the CBT said in a statement, PTI reported.

The said company is held by a group based in Cayman Island, ultimately controlled by an individual of a neighbouring country.

The company has brought in India nominal initial capital by way of Foreign Direct Investment (FDI) but took substantial working capital loans from Indian banks.

The business model of the company results in high rotation of capital which is evidenced by turnover of Rs 10,000 crore in its first year of operation. It is seen that repatriation of about Rs 500 crore has been made by it to its overseas group companies under the pretext of buying of services in two years.

However, evidence gathered during the search has revealed that such remittances made to the group companies are either highly inflated or not genuine.

Evidences found also indicate that internal web-based application for lending business was controlled from outside India, the department said.

During the search proceedings, statements of key persons, including foreign nationals, have been recorded. Further investigations are in progress.

(With inputs from PTI and IANS)