Income Tax Raid On FinTech Company Providing Instant Personal Loan

The Income Tax Department conducted a search and seizure operation in the instance of a Fintech company that offered an instant short-term personal loan using a mobile app on November 9, 2021. The searches were carried out in Delhi and Gurugram at both commercial and residential locations.

During the investigation, it was discovered that the company had been collecting an extremely high processing fee at the time of loan issuance. As a result, the debtors' reparation burden is effectively increased.

The corporation is owned by a Cayman Island-based group that is ultimately managed by a citizen of a neighboring country. The company imported nominal initial cash into India through Foreign Direct Investment (FDI), but it needed significant working capital from Indian banks.

The company's business model results in a high level of capital rotation, as indicated by a turnover of Rs. 10,000 crore in its first year of operation.

It has been discovered that it has repatriated almost Rs. 500 crore to its offshore group entities under the guise of buying services in the next two years.

However, information uncovered throughout the investigation revealed that such transfers to the group companies are either grossly exaggerated or not genuine.

Internal web-based application for lending business was also controlled from outside India, according to evidence discovered. During the search, crucial people's comments, including those of foreign nationals, were recorded.