Tax Officials Raid Madhya Pradesh Onion Traders, Expose Major Racket

The surveys revealed that the traders were allegedly paying farmers just Rs 10 to Rs 20 per kg of onions while ensuring that customers shell out upwards of Rs 80.

Tax Officials Raid Madhya Pradesh Onion Traders, Expose Major Racket

Sources say that the actual tax evasion figures of the onion racket could be even higher.

Bhopal:

A survey of shops and godowns owned by six major onion traders in Madhya Pradesh's Shajapur district by income tax officials on Tuesday has led to the disclosure of unaccounted income amounting to Rs 5 crore as well as indications that they may have manipulated their stocks to inflate retail prices.

Tax officials also found two traders hoarding onion stocks worth Rs 37 lakh on their premises during searches. Surprisingly, prices of the vegetable in the Bhopal market dipped hours after the operation ended.

The surveys revealed that the traders were allegedly paying farmers just Rs 10 to Rs 20 per kg of onions while ensuring that customers shell out upwards of Rs 80. This essentially meant that the difference was being shared between brokers and traders, all dealing in cash in violation of the Income Tax Act.

Interestingly, the income tax operation in Shajapur - conducted as part of a larger crackdown on onion traders across the country - revealed that the entire market for the vegetable functions on physical currency. "Making purchases from farmers in cash is allowed, but the surveys revealed that the transactions between traders and brokers were also happening entirely in cash. This is illegal, and possibly part of a strategy to inflate onion prices in the market through hoarding and manipulate cash as well as stocks," a source said.

The source also claimed that while officials initially detected undisclosed income amounting to Rs 5 crore, it was highly possible that further scrutiny of documents seized from their premises could throw up a tax evasion figure that's even higher.

The centre had earlier said that it will import 1 lakh tonnes of onion to control onion prices, which have shot up to around Rs 100 per kg in some places, including the national capital.

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