ITC, Prataap Snacks, PepsiCo, Balaji Wafers, under DGGI scanner for alleged tax evasion: Report

CNBC-TV18 exclusively reports that in a significant move targeting several major players in the fast-moving consumer goods (FMCG) sector, the Directorate General of GST Intelligence (DGGI) has initiated actions against FMCG companies including ITC, Prataap Snacks, PepsiCo, Balaji Wafers, RP Sanjiv Goenka Group, and others for alleged tax evasion.

Sources told CNBC-TV18 that the DGGI has escalated its crackdown on nearly 10-12 FMCG companies, citing issues related to classification leading to alleged tax evasion. "The DGGI has sent notices and investigation intimation letters to FMCG companies for paying a lower rate of Goods and Services Tax (GST) on products coming under the head of — extruded snacks and fried pellet snacks," the CNBC-TV18 report said quoting sources.

DGGI's preliminary estimates suggest significant revenue losses due to the alleged GST evasion. "The DGGI has alleged Rs 500 crore GST evasion by ITC Ltd, Rs 300 crore by Prataap Snacks Ltd., Rs 175.89 crore by PepsiCo India, Rs 19 crore by Balaji Wafers, Rs 39.14 crore by RP Sanjiv Goenka Group's Guiltfree Industries Ltd., and Rs 68 crore by Sarveshwar Foods Ltd.," the sources told the channel.

Experts quoted in the report said that classification discrepancies under indirect tax laws have been one of the most common matters of litigation historically.

The government had, in 2023, clarified that any snacks that have been prepared by extrusion process should attract 18 percent and not 12 percent as is being paid by the industry currently.

The report also states that noting these investigations and communications from the government, the industry has made a detailed representation to the Finance Ministry seeking clarity on the matter so that future payments of GST can be made accurately to avoid any such future action by DGGI.

Read More: Haldiram’s to buy snack foods company Prataap Snacks