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Chinese smartphone makers face Rs 9,075 cr tax evasion probe

The government on Friday said that Chinese handset makers such as Xiaomi, Realme, Oppo, Vivo, and Oneplus, have evaded GST of ₹1,108.98 crore and custom duties of ₹7,966.09 crore over the last five years – between 2017-18 and 2023-24 (up to July 1).

Show cause notices have been issued to these companies and investigation has been initiated, Rajeev Chandrasekhar, Minister of State for Electronics and Information Technology, said in a reply to questions by Narain Dass Gupta, MP, Rajya Sabha. The companies are being persuaded to deposit the tax amount/ interest/ penalty as applicable, the Minister added.

For instance, in 2018-19, Xiaomi has evaded customs duty of ₹89 lakh which it paid along with interest of ₹31,77,721 and penalty of ₹13,30,143, and its file was closed. However, in 2019-20, it evaded customs duty of ₹653.02 crore of which it has only paid ₹46 lakh. The government has issued a show cause notice to the company on the shortfall.

Similarly, in 2020-21, Oppo Mobile India evaded customs duty of ₹4,389 crore, of which it paid only ₹450 crore. Vivo India also evaded customs duty of ₹2,217 crore during the same year of which it has paid only ₹72 crore. In the same financial year, Xiaomi has evaded ₹23.99 crore of customs duty of which it has paid only ₹4.8 crore. Show cause notices have been issued to all these companies.

Most of these companies have also allegedly evaded GST payments. Xiaomi evaded ₹168.63 crore of GST of which government has recovered only ₹82.4 crore. Oppo evaded GST of ₹683.04 crore. While it has paid most of the amount, the government has to recover interest/ penalty as applicable.

Lenovo India has also evaded GST of ₹42.36 crore and has not paid anything yet.

Contract manufacturing
“Primarily, these Chinese companies have setup their own manufacturing units; however, they work with contract manufacturers like Bharat FIH Limited and DBG Technology (India) Private Ltd also which have set up electronics manufacturing services (EMS) operations in India. The distribution of mobile handsets is mainly handled by Indian companies, however, some of the Chinese companies like Oppo and Vivo have some Chinese distributors also,” Chandrasekhar said.

He informed Parliament that the major Chinese brands which are operating in India include Oppo, Vivo, Xiaomi, Transsion (operates three brands in India – Itel, Tecno and Infinix), Realme and Oneplus. These companies manufacture mobile handsets either by themselves or through contract manufacturers.

“Their cumulative turnover in 2021-22 was estimated to be ₹1.5-lakh crore in India. The total direct employment generated by them in their manufacturing operations is more than 75,000. They also have sales and operational workforce of around 80,000 workers,” he further said. The Hindu Business Line

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