cbdt: IT department descends on instant loan application company; Rs 500 crore in funds illegally transferred abroad

A fintech company that provided instant loans through a mobile app was found to have repatriated “non-genuine” funds of Rs 500 crore overseas, the CBDT said on Wednesday. The information was gathered by the Income Tax Department after raiding the business in Delhi and Gurgaon (Haryana) on November 9.

“During the search, it was revealed that the company allegedly charged very high processing fees when the loans were disbursed.

“This translates into a higher indemnification burden for borrowers,” the Central Commission on Direct Taxes (CBDT) said in a statement.

He said the company is owned by a group based on Cayman Island, ultimately “controlled by an individual from a neighboring country.”

“The company brought nominal initial capital to India through foreign direct investment (FDI), but has taken out substantial working capital loans from Indian banks.

“The company’s business model results in high capital turnover, as evidenced by turnover of Rs 10,000 crore in its first year of operation,” he said.

The CBDT, which oversees the department’s policy, said it was found that the company repatriated around Rs.500 crore to its overseas group companies under the guise of buying services in two years.

“However, the evidence gathered during the search revealed that these remittances to group companies are either heavily inflated or unauthentic.”

“The evidence found also indicates that the internal web application for lending activities was controlled from outside India,” he said.

The department also recorded statements from key individuals, including foreign nationals.

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