Even as international company CEOs like the head of Netflix, Reed Hastings, say that "every country should have a Reliance Jio", Jio's parent company Reliance Industries is being pulled up by the Comptroller and Auditor General over what it says are significant tax filing discrepancies. Upcoming in the CAG's audit according to media reports, are red flags that emerged out of an integrated audit that CAG conducted of Reliance Industries.
CAG said that it has unearthed multiple tax discrepancies which it said should have been identified by the Income Tax Department. The CAG identified multiple cases, it says, of the company attempting to lower its tax burden via non-standard reporting practices.
This includes for example, RIL layering multiple transactions, as well as merging and demerging companies to reduce tax liability and avail carry forward benefits of losses. One example that has turned up is the Rs 8,304 crore investment by Reliance Universal Ventures Ltd to buy equity shares of Reliance Retail. The audit - which is expected to be released within the next two months - identifies shares purchased and swapped by RIL multiple times across different entities to create losses where there were none, avoiding tax payouts.
Reliance's share price has been trending lower over the past week. Reliance has yet to respond to the news, except to say that it pays taxes in accordance with the law. That statement leaves wiggle room, since there is the law and then the interpretation of it via such practices.