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UPI (Unified payment Interface) – Combating Tax Fraud and ensuring Cybersecurity Compliance.
- Unified Payment Interface (UPI) has transformed the way transactions are carried out in India, however, it opens doors for tax frauds and cybersecurity threats. In India, tax fraud is a recurring problem, with people hiding their income to evade taxes.
- UPI is equipped with measures that help reduce tax fraud and tax avoidance as every transaction carried out through UPI is traceable. This helps to monitor suspicious payments, identify tax fraud and deception, and track the actual source of income.
- Businesses getting payments via UPI are susceptible to scrutiny to ensure compliance with GST (Goods and Services Tax). UPI is taking people away from using cash and taking them towards digital payments.
- Although UPI has a strong regulatory framework, cybersecurity threats still exist. Cybercriminals have replaced QR codes in shops and stores and diverted payments to themselves, generated false UPI links and impersonated UPI platforms to steal individuals’ credentials and empty their bank accounts.
- UPI has taken essential steps and measures to protect users and maintain the reputation of the system, including end-to-end encryption of data transmitted, frequent and regular audits, and the two-factor authentication feature.
- The relevant legal framework to counter tax fraud and cybercrime includes statutes such as Income Tax Act, Goods and Services Tax (GST) Act, Indian Computer Emergency Response Team (CERT-In) and Cyber Crime Cells.
- UPI's rise has made these frauds traceable and detectable for the authorities. The Government's initiative of mandatory KYC and linking Aadhar card and PAN Card makes tracking high-value transactions and complying with regulations easier.
- Although effective laws have been put in place, timely changes and amendments are required to keep up with the ever-changing ambit of digitalization and technology.
- In conclusion, UPI has helped leverage scrutiny, maintaining checks and balances to avert tax fraud while maintaining the need for additional measures to keep up with new threats.
- Author: Astha Sathe, for any queries, please contact/write back to us via email to [email protected] or at IIPRD
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