Xiaomi, Oppo violate tax law, may face fine of Rs 1,000 crore

Several Chinese phone makers were raided last week.

New Delhi: Mobile phone makers Xiaomi and Oppo could be fined Rs 1,000 crore for violating the law, the Income Tax Department said today after a nationwide search last week, underlining that over 1,400 crore from increased expenses. The taxable profit of excess has come down.

On December 21, raids were conducted in Delhi and 11 states- Karnataka, Tamil Nadu, Assam, West Bengal, Andhra Pradesh, Madhya Pradesh, Gujarat, Maharashtra, Bihar and Rajasthan.

In a statement today, the tax department said, “The search action has revealed that the two major companies have made remittances in the nature of royalty to and on behalf of their group companies located abroad, aggregating more than Rs 5,500 crore.” ”

“These companies had not complied with the regulatory order prescribed under the Income Tax Act, 1961 for disclosure of transactions with the enterprises concerned. Such omission renders them liable to penal action under the Income Tax Act, 1961, which may amount to may be in the range of more than Rs 1,000 crore,” the statement added.

The source of foreign funds is also doubtful, the central agency asserted: “The search has brought to the fore another methodology whereby foreign funds have been introduced in the books of an Indian company, but it turns out that the source from which Such funds received are of dubious nature, alleged to have no creditworthiness of the lender.”

The quantum of such borrowing is around Rs 5,000 crore, on which interest expense has also been claimed, it underlined.

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