Xiaomi and Oppo, two Chinese smartphone companies, have been targeted by the Indian government for allegedly violating the Income Tax Act. According to the central government, Chinese smartphone companies have stolen a large sum of money in violation of income tax rules, for which they could face fines of more than Rs 1,000 crore. The Income Tax Department raided the offices of Chinese smartphone companies and their subsidiaries across the country on December 21 of last year. Many important documents were obtained by the Income Tax Department as a result of this. Documents obtained from Chinese companies that manufacture mobile phones and handsets revealed that the companies were openly violating India’s Income Tax Act.
Last week, the Income Tax Department raided Karnataka, Tamil Nadu, Assam, West Bengal, Andhra Pradesh, Madhya Pradesh, Gujarat, Maharashtra, Bihar, Rajasthan, Delhi, and the National Capital Region (NCR).
5500 crores were sent overseas.
The Income Tax Department’s action has revealed that two large smartphone companies, Xiaomi and Oppo, have been sending money to their group companies in other countries in the form of royalty payments. More than Rs 5,500 crore has been discovered to have been remitted this way. The evidence and facts discovered during the search action could not be reconciled with these costs.
A fine of up to 1000 crores is possible.
Xiaomi and Oppo, two of China’s largest smartphone manufacturers, did not respond to questions about this. In the Income Tax Department’s search operation, the improper operation of businesses was also discovered. According to the Income Tax Act of 1961, both companies have not disclosed their operations in India. As a result, the central government has the power to fine both smartphone companies thousands of crores.
The search operation also revealed how components for mobile phones are procured. Both of these companies had not disclosed their transactions with their respective companies in accordance with the provisions of the Income Tax Act of 1961, according to the department. They may face penalties under the Income Tax Act of 1961 as a result of this. The fine could be in excess of Rs 1,000 crore.