Makemytrip, under scanner for tax evasion

Just after startups mega event in New Delhi which guaranteed better environment for start-ups, may need up some serious reform.

Makemytrip, India’s one of the best online travel portal has come under investigation scanner for alleged service tax evasion of Rs. 75 crore. The case was registered by The Directorate General of Central Excise Intelligence (DGCEI) for allegedly not depositing service tax which it had collected from the customers. This has come as one of the most shocking one in startup news world. 

For the examination, company’s senior executive was also arested by the DGCEI, who was further released on bail. 

In the investigation by DGCEI, it was reported that the company was collecting two types of taxes–service tax on 60 per cent of the rate negotiated by MakeMyTrip with the hotels towards renting of rooms and service tax on 10 per cent of the gross value on the customer vouchers by treating themselves as tour operators. The second category of service tax was being mentioned as MMT (Makemytrip) Tax by the firm. It was found by that Makemytrip was depositing MMT tax but not one collected from the customers in renting of hotels. 

The firm has collected Service Tax of about Rs 83 crore (approximately) from October 2010 to September 2015 from customers for taxable service of renting of hotel rooms out of which Rs 67 crore has not been deposited in the government account, the sources said. 

Makemytrip  founded by Deep Kalra in 2000 has firmly denied the charge, according to  the sources. 

"At Makemytrip  we strongly believe in an athical and transparent and a=complaint corporate culture and by all laws and regulation of the country. The service tax issue in question is potentially an industry issue that can impact all Online Travel Agents." company spokesperson quotes to PTI. 

With this incident, other travel portal like Yatra, Expedia are also under scanner and DGCEI  also conducted background check of 30,000 hotels for the same.

For more useful articles on startups like this, visit our journal You can also join our official Facebook group, like our Facebook page and follow us on Twitter mentioned below.