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It is forbidden for someone or something to fail to pay their genuine tax obligations knowingly. Following dodging taxes, people are subject to harsh penalties and legal action. Under the Internal Revenue Service (IRS) tax code, it is a federal crime for individuals or organizations to fail to pay taxes intentionally. Government agencies have traditionally compiled a lengthy list of tax fraud schemes.[1] Tax fraud is nothing new to us all. This is the single characteristic of Indians that causes them to avoid paying their taxes and instead engage in tax fraud.

Cybercrime is always the top option in today's new technological era. Every citizen of a nation must pay taxes, so tax evasion in cyberspace is also a theft from the government.

Financial and social security identity theft is becoming more and more accessible to fraudsters on the dark web each year. This implies cybercriminals can create a new identity with just a few mouse clicks. The ability of fraudsters to obtain the necessary documents and credentials for successful tax identity theft will increase. These cybercriminals now exploit the COVID-19 pandemic situation to their advantage.


With the development of the internet and its global reach, business activity through "Electronic methods" has flourished and is now known as "E-Commerce." But despite appearances, the idea of e-commerce encompasses several legal and technical concerns, such as supply chain management, service management, proper payment facilitation, and jurisdictional issues. Even though they know that failure of the e-commerce due diligence stakeholders would make them accountable for such violations, e-commerce stakeholders, including venture capital and private equity makers of India, do not adhere to the technical legal requirements prescribed by various Indian laws. The purpose of this essay is to highlight the many jurisdictional problems that result from online business transactions. This article also discusses how consumers are safeguarded and what laws and regulations govern online commerce to do this.

Tax Evasion in Cyberspace

These online thieves use identities they stole to file tax forms and get refunds. According to research by IBM X- Force.[2] These cybercriminals have launched several tax-themed operations targeting consumers and companies. By sending messages that appear to be from well-known accounting, tax, and payroll companies like ADP and Paycheques, they deceive people.

These attackers use an alleged fake, a typical banking Trojan that infects devices and facilitates data theft, to steal data to commit wire fraud from the owner's account. These attackers only need one person to believe a fake email before they are in with their malware and know the specifics of their targeted victims. Another issue indicating that identity theft is not going away anytime soon and will worsen daily is the low cost of service data.

Because China is currently posing a threat to all of us, most taxpayers who use mobile apps to pay their taxes are also endangering taxpayers. Users are unaware whether the apps they are using are authentic or phony, and they allow the fake apps to access all of their personal information since most e-filing applications for payments do not save information about taxpayers.

However, phony mobile apps impersonate well-known tax services to obtain people's private information. Most of these are housed on the Google Play and Apple App Stores, two third-party retailers. As I mentioned before, tax fraud is not a new crime, but in recent years, the number of cyber criminals engaging in tax fraud has skyrocketed.

With the advancement of technology come new tools that cybercriminals use to commit tax offenses. Cybercriminals' new instruments for crime include data breaches, intrusions, takeovers, and compromises. Most investors and their tax advisors need to learn how to pay taxes virtually because they don't know how to do so.

Judicial Pronouncements

The Delhi government discovered approximately Rs. 262 crores in tax fraud in 2018. Since 2013, 8,700 dealers have been found guilty of tax cheating after presenting nearly 13 banks with fake tax deposits. In this case, the commerce and tax department has complained to Delhi Police's Economic Offenses Wing (EOW) over the FIR.[3]

Another instance of transporters' tax fraud is from the Una District Mehatpur region.[4]

The Bureau of Vigilance and Anti-Corruption conducted the inquiry. Several private transporters have committed passenger and Goods Transport Tax Evasion. 15 fraudulent deposit challans were found in a cybercafe called Ratan Web Solution. A few "agents" who worked for some carriers would deposit a certain amount of tax in banks and then inflate the numbers on the counterfoils.

The banks then give them back to the agent so they can deposit the money in the treasury and provide the Excise and Taxation Department with documentation that they have deposited the required tax. The tax, bank, and Treasury collection departments could not obtain the funds for nine years. And for around nine years, the state government's revenue has been lost by crores of rupees.


In the upcoming years, lawmakers and law enforcement organizations will continue to discuss the jurisdictional and taxation issues constantly evolving in the internet world. Only when the lawmakers of the many nations fully grasp the technology and its potential will there be agreement on the principles of taxation and jurisdiction.

All taxes were paid offline up until 2016. However, in 2016, e-filing and online payments for taxes became the norm in India. Due to the size of cyberspace and the massive number of users, there are many security weaknesses. A drawback of having too many users is that it is complicated to check each one regularly.

The majority of them misuse technology and take advantage of its shortcomings. Online malpractice of this nature is a significant legal offense. Tax authorities constantly monitor accounts from which significant amounts of digital transfers or other transfers have been made to detect these tax evaders. They also review their earlier records to look for any indication of fraud.

If we are speaking about countries other than India, Internal Revenue Services (IRS) retains a record of every digital payment made. These cybercriminals also take the required actions. One of their statements claimed that tax avoidance has become a severe issue recently and has developed rapidly in cyberspace. Tax evasion has been a worry for many nations. MNCs like Google, Amazon, Facebook, and Apple, or the "GAFA gang," are problem-maker for most countries like Germany, the US, the UK, and France because they do not pay taxes.

-- [1] Internal Revenue Service (IRS), Investopedia (2020), (last visited on Jul 7, 2022). [2] Tax Hacks: How Seasonal Scams Cause Yearlong Problems, Dark Reading (2020), (last visited at Jul 7, 2020) [3] Tax Team, Cyber Tax Evasion of Rs 262 crore detected in Delhi, (last visited on Jul 2, 2020). [4] Fake tax deposit challans found at Una cyber cafe, Tribune india News Service (2020), (last visited at Jul 2, 2020).

This article is written by Arghya Chakraborty of M.S.Ramaiah College of Law.

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