These two Chinese mobile companies may have to pay ₹1,000 crore for tax evasion

In a statement issued on Friday, the Central Board of Direct Taxes (CBDT), the parent body of the IT department, said, “The search action has revealed that two major companies (referring to Oppo and Xiaomi) have remitted in nature royalty, To and on behalf of its group companies located abroad, which aggregates more than 5,500 crore.”

“The claim of such expenses does not appear to be justified in the light of the facts and evidence collected during the search operation,” it said.

“It is collected that both these companies did not comply with the regulatory order prescribed under the Income Tax Act, 1961 for disclosure of transactions with the respective enterprises. Such omission renders them liable to penal action under the Income Tax Act, 1961, the extent of which may extend to more than that. 1,000 crore,” the CBDT statement said.

Subsequently, investigations have brought to the fore the modalities of introduction of foreign funds into the books of the Indian company along with the purchase of components for the manufacture of mobile handsets, but it turns out that the source from which such funds were obtained. the same is of doubtful nature, allegedly having no creditworthiness of the lender. “The quantum of such borrowing is approx. 5,000 crore, on which interest expense has also been claimed.”

The department said it has found evidence regarding inflation of expenses, payments by the associated enterprises, etc., which have led to reduction in the taxable profits of the Indian mobile handset manufacturing company. “Such an amount can be greater than 1,400 crores,” it further said.

The taxpayers also found that one of the companies used the services of another entity located in India but did not comply with the provisions of deduction of tax at source with effect from 1st April, 2020 and made the liability of TDS on this account Quantity can be approx 300 million.

Another mobile company was also raided by IT on December 21, to which, without anonymity, the department said that “it has been learned that the control of the company’s affairs was largely managed from a neighboring country”. .

“The Indian directors of the said company admitted that they had no role in the management of the company and their names were given for directorship for the purposes of the name. Evidence gathered on the attempt to transfer the entire reserves of the company to the tune of have been done CBDT said, 42 crore from India, without payment of due taxes.