The tax division has carried out raids throughout the premises of overseas cell phone producers, who may very well be liable to pay fines of as much as Rs 1,000 crore, the finance ministry stated on Friday.
The search and seizure operations had been carried out throughout a number of states on December 21. (*2*) the assertion stated.
Evidence has emerged that the 2 firms may very well be under-stating taxable profit by greater than Rs 1,400 crore.
The assertion didn’t identify the 2 firms. A report by NDTV stated that they had been Xiaomi and Oppo. However, this might not be confirmed independently. “It is gathered that both these companies had not complied with the regulatory mandate prescribed under the Income-tax Act, 1961 for disclosure of transactions with associated enterprises,” the ministry stated.
The raids revealed a modus operandi, whereby overseas funds had been launched within the books of the Indian firm however sourced from doubtful lenders with no credit score worthiness. The quantum of such borrowings is about Rs 5,000 crore, on which curiosity bills have been claimed.
It was discovered that one of the businesses utilised the providers of an Indian entity however didn’t adjust to the provisions of tax deduction at supply, which might make it accountable for dues of an extra Rs 300 crore.
The ministry stated that the tax division would examine the matter additional.