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Thursday, October 15, 1998 Published at 11:50 GMT 12:50 UK


World: South Asia

Taxmen swoop on Indian fashion houses

South Asian fashions: enormous demand

By Delhi Correspondent Daniel Lak

Income tax officials in India have raided homes and shops belonging to the country's top fashion designers in Delhi, Bombay and several other cities, looking to collect more than $10m in unpaid taxes.

Officials say they expect to bring criminal proceedings against anyone found to be evading taxes.

Boom

Indian high fashion has boomed in recent years as the economy grew at an unprecedented rate.

The demand for uniquely Indian fashions from the newly wealthy middle classes has given designers a market for clothing that is usually a hybrid of East and West and is always expensive.

This is the first time that the Income Tax Department has targeted fashion, and they've done so with a vengeance.

Truckloads of documents were taken away from around 24 homes and shops across the country during raids on Wednesday and Thursday.

Two prices

A senior income tax official told the BBC that more than $10m in unpaid taxes could be involved. He said a common practice in the industry was to charge several hundred dollars for a suit or shirt but to mark it down in company books at a more typically Indian price - say a dollar or two.

The official also said criminal proceedings could be expected. He added that customers of such expensive designers would also have their tax records examined.

There's been, as yet, no comment from anyone in the fashion business.

Indians are notoriously fickle taxpayers - income tax revenue comes mainly from salaried and working people, and the rich either under-declare their assets or avoid paying at all.



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