Oppo, Vivo, Xiaomi Accused Of Evading Taxes Worth ₹9,000 Crore In India: Recovery Slow But On Track?

The Indian government confirmed that the Chinese mobile phone makers, including Oppo Mobile, Vivo India, and Xiaomi Technology, have collectively evaded taxes worth ₹9,000 crores in India.

Data shared by the Minister of State for Electronics and IT Rajeev Chandrasekhar in Rajya Sabha indicated that taxes such as Customs duty and GST weren’t remitted by most of the leading Chinese phone makers. Let’s look at the developments and see if they could have any impact on these Chinese companies.

Chinese Phone Makers Evaded ₹9000 Crores Of Taxes (Customs Duty And GST)

The Indian government has been clamping down hard on multiple Chinese companies, notably smartphone manufacturers for the past three years. Some companies had even threatened to leave, while a few others had even wound up some offices, but most of these Chinese mobile phone makers are still quite operational in India.

Data shared with the Indian parliament last week revealed that Chinese smartphone makers, including Oppo Mobile, Vivo India, and Xiaomi Technology, have managed to successfully evade taxes worth ₹9,000 crore in India.

Chinese Mobile companies like Xiaomi, Oppo, Vivo operating in India posted huge losses in last 2 years despite higher market share and increased Incomes.

This is the possible reason why they are under Income tax scanner for possible Tax Evasion. pic.twitter.com/T2CDCUpa7k

— Rishi Bagree (@rishibagree) January 17, 2022

The tax evasion by Oppo Mobile, Vivo India, and Xiaomi Technology is reportedly from 2018-19 to 2022-23. Breaking up the figure, Oppo Mobile India Pvt Ltd has been found evading ₹5,086 crore in taxes. Splitting up the figure reveals the company evaded ₹4,403 Crores in Customs duty and ₹683 Crores in the form of GST.

According to the written reply from Chandrasekhar, Vivo has evaded taxes worth ₹2,923.25 crore, which includes ₹2,875 crore in Customs duty and Rs 48.25 crore in GST.

Bold decision by Government of India to tighten bolts on 🇨🇳. Chinese cos are infamous for tax evasion as per recent reports of mobile company. All Chinese cos manufacturing electronic gadgets should be brought under scanner of I -tax & FERA. Decoupling is one of the best weapons.

— P.K. Pitre(Veteran) (@pkpitre19) July 23, 2023

In the case of Xiaomi Technology India Pvt Ltd., the government has claimed the company evaded taxes worth ₹851.14 crore. The breakup reveals tax evasion of ₹682.51 Crores in customs duty and ₹168.63 crore in GST.

Besides Oppo, Vivo, and Xiaomi, even Lenovo has been accused of evading taxes in India. The submitted report claims Lenovo has evaded ₹42.36 crore GST.

Indian Government Has Recovered Only ₹1,629.87 Crores?

According to the written submission, the Indian government has been able to recover ₹1,214.83 Crores from Oppo, ₹168.25 Crores from Vivo, and ₹92.8 Crores from Xiaomi.

Cumulatively, the central administration’s multiple departments have been able to recover just ₹1,629.87 Crores of the ₹9000 Crores.

INR 9000 Crores might seem like a huge amount. However, the cumulative turnover of Chinese mobile phone makers has been crossing ₹1 Lakh Crores every year since the year 2020. Although core manufacturing still takes place in China and other parts of the world, India is fast becoming the sales, service, assembly, testing, and development hub for smartphone manufacturers.

Cumulatively, the Chinese smartphone makers employed more than 75,000 employees in their manufacturing operations. Additionally, these companies regularly maintain a staff of more than 80,000 employees in the sales and backend operations.

Most Chinese smartphone manufacturers operational in India have been accused of showing multiple foreign payments as royalties for uses of licenses and other intangible assets. The Indian government has strongly maintained that these companies illegally funnel money back to their home country using highly questionable tactics.

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published: Monday, July 24, 2023, 15:52 [IST]