The issue of circular trading could be taken up by the Goods and Services Tax (GST) Council in its upcoming meeting.
About:
Circular trading refers to fraudulently availing input tax credit by traders by issuing of invoices without availing any real goods or service.
In simple words, circular trading refers to the transaction of selling and buying of goods (without actual movement of goods) through shell companies.
Circular trading is a circular which is being formed by a group of companies engaging themselves in fake sales transaction by producing fake sale invoices.
The main objective of circular trading is inflating turnover of the business. However, through circular trading, companies may also aim to:
To increase the valuation of the company/business;
To benefit higher loans from the Banks or Non-Banking Financial Corporation (NBFC);
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