INCOME TAX PROBE ON CHINESE ENTITIES

Income tax department launched a search operation on some Chinese individuals as it suspected links to money laundering and hawala transactions of over Rs 1000 crores. On 11th August 2020, there was a huge search operation initiated against Chinese individuals and Indian alliance and on a few bank employees who were spread across Delhi, Gurgaon, and Ghaziabad by the Central Board of Direct Taxes (CBDT). During this extensive search, it came into light that in the name of dummy entities about 40 bank accounts were created, and these dummy entities are the institutions run by Chinese firms. The investigation has disclosed that a subsidiary of Chinese company and its related company in bogus has taken over Rs 1000 crores advances from shell entities and this was done to set up a business of retail showrooms in India. Further during the search, the tax officials found implicit documents for hawala transactions, and also it was revealed that there is the active involvement of Chartered Accountants (CA) and bank employees. A lot of evidence regarding foreign hawala transactions that involve US and Hong Kong dollars have also been found. This massive crackdown by the Income Tax Department on the nexus of Chinese companies operating using hawala transactions is a huge step to curb all illegal activities being conducted in the country.

By the amendment in Foreign Direct Investment (FDI) in April 2020, the ban was imposed on investments that came through automatic route by institutions from countries sharing borders with India. Various actions have been discovered to cut off Chinese economic inroads in India and few sources have also revealed that there are plans to impose higher import duty on laptops, cameras, power equipment, defence equipment, textiles etc so that the import of Chinese goods will be curbed in India.