India, July 16 -- Most people in India hire taxis to travel from one place to another without knowing that the cab they are travelling in may be involved in a major tax fraud. Travel agents and taxi operators across the country are allegedly running this racket, sometimes with the knowledge and participation of passengers.

Kavita, a working professional, has been commuting to her office every day in a private hire taxi for the past three years. She had no idea that the taxi she regularly used was operating illegally and contributing to a tax fraud that costs the government crores of rupees. She learnt about it only after a friend told her that the taxi she had hired was illegal.

The illegal taxi business is not new in India and has long...