Chinese cellphone supplier on tax radar

The Income Tax Department is conducting searches across states at the premises of Chinese mobile phone suppliers and their associates in connection with suspected tax irregularities, a person familiar with the development said.

The person, who spoke on condition of anonymity, said the searches that began on Tuesday cover about two dozen premises in several cities. The person said that suppliers of brands OPPO, Xiaomi and OnePlus are involved in the search.

A spokesperson for Xiaomi said that the company is paramount to fully complying with all laws. “As a responsible company, we attach paramount importance to ensuring that we comply with all Indian laws. As an invested partner in India, we are cooperating fully with the authorities to ensure that they have all the necessary information,” the spokesperson said.

Emails sent to Oppo and OnePlus remained unanswered at the time of publication. Emails sent to the finance ministry seeking comment on the development did not elicit any formal response. The tax department does not identify the taxpayer in any tax case unless it is disclosed as part of a court proceeding. Also, the department is yet to make any statement about the findings of the search operation. In many cases, the department makes a statement about preliminary findings in major search operations without identifying the assessee.

With increasing use of technology and data analytics and greater coordination between direct and indirect tax authorities, the government is now looking for mismatches in information received from multiple agencies to identify cases of potential revenue leakage.

Mobile phones from Xiaomi, OPPO and South Korea’s Samsung are among the major brands in the Indian market dominated by Chinese players. Xiaomi says that it has a presence in over 30 countries and territories on its website and is expanding its footprint around the world to become a global brand. India is currently taking policy steps to encourage local production of mobile phones, including encouraging local manufacturing and adjusting the customs duty structure to discourage imports of finished products.