Indian tax authorities have singled out Volkswagen as the only automaker to wrongly classify its car imports for 12 years to evade Rs 12,000 crore ($1.4 billion) in taxes, even as rival Kia changed its practice after being warned, according to court papers.
### Background and Allegations
Volkswagen, a relatively small player in India’s car market, faces a potential liability of Rs 24,000 crore ($2.8 billion), including penalties and delayed interest, if found guilty. The court fight over this record tax demand is described as a matter of “life and death” by Volkswagen’s Indian unit.
Indian authorities allege that Volkswagen used a clandestine scheme to import auto parts in separate shipments to evade detection and reduce taxes, instead of declaring items as “completely knocked down” (CKD) units, which face higher taxes of 30% to 35%.
### Comparison with Other Automakers
In rebutting Volkswagen’s court plea, tax authorities listed 10 carmakers, including Mercedes-Benz, BMW, and Hyundai, that correctly classified their imports despite using “split consignments” to bring in parts. South Korea’s Kia, after being warned, corrected its practice and now classifies such imports correctly.
### Kia’s Response
Kia is contesting a Rs 1,350 crore ($155 million) tax demand from 2024 for similar imports of parts for its Carnival luxury minivan. A senior Indian tax official confirmed that Kia had “accepted misclassification” and corrected its process but cited a lengthy investigation period as justification for contesting the tax demand.
### Legal Proceedings
The Mumbai High Court is expected to decide within days the outcome of Volkswagen’s challenge to its tax demand. Volkswagen has criticized India for taking up to 12 years to review some shipment records, but tax authorities argue that the delay was due to Volkswagen not providing necessary documents in time.
### Conclusion
The case highlights concerns over lengthy tax disputes impacting foreign investment in India. As the legal battle continues, the outcome will be closely watched by investors and industry stakeholders.
See insights and ads
পোস্ট প্রচার করুন · Promote post
Like
Comment
Send
Share
