Xiaomi India Handed Rs 653 Crore Notice For Evading Tax: Report

Handset maker Xiaomi was on Wednesday slapped with a whopping Rs 653 crore notice over alleged tax evasion in India.

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New Delhi: Handset maker Xiaomi was on Wednesday slapped with a whopping Rs 653 crore notice over alleged tax evasion in India, according to Finance Ministry’s Directorate of Revenue Intelligence (DRI).

The DRI set up investigations against Xiaomi and its contract manufacturers after being tipped that it was evading taxes by way of undervaluation, reports suggested.

"After completion of the investigation by the DRI, three show-cause notices have been issued to M/s Xiaomi Technology India Private Limited for demand and recovery of duty amounting to Rs. 653 crore for the period 01.04.2017 to 30.06.2020, under the provisions of the Customs Act, 1962," the Finance Ministry said in a statement, according to a report by news agency PTI.

"Statements of key persons of Xiaomi India and its contract manufactures were recorded, during which one of the directors of Xiaomi India confirmed the said payments," the Finance Ministry added.

During the investigation, searches were conducted by the DRI at the premises of Xiaomi India, which led to the recovery of incriminating documents indicating that Xiaomi India was remitting royalty and licence fee to Qualcomm USA and to Beijing Xiaomi Mobile Software, under contractual obligation, the PTI report added.

It further emerged that the "royalty and licence fee" paid by Xiaomi India to Qualcomm USA and to Beijing Xiaomi Mobile Software, China (related party of Xiaomi India) were not being added in the transaction value of the goods imported by Xiaomi India and its contract manufacturers, it added.