The Finance Ministry informed the parliament that major Chinese smartphone companies such as Xiaomi, Vivo and Oppo have evaded custom duties and made illegal remittances in India to the tune of at least Rs 8,000 crore.
Overview
Of this, the tax authorities have managed to recover only Rs 604.55 crore which is only about 8 percent of the total amount evaded.
Additionally, the ministry has identified 13 instances where the companies were committing GST evasions from July 2017 to June 2023.
The authorities managed to recover nearly Rs 1025 crore out of about Rs 1108 crore GST that was evaded.
“The major Chinese mobile handset brands which are operating in India are Oppo, Vivo, Xiaomi, Transsion (operates three brands in India viz. Itel, Tecno and Infinix), Realme and Oneplus.
Their cumulative turnover in 2021-22 was estimated to be Rs 1.5 lakh crore in India,” the ministry stated.
Xiaomi
Xiaomi India has been issued multiple show-cause notices for customs duty evasion in FY20, FY21, and FY22.
It owes a cumulative amount of Rs 682.51 crore, of which the government has recovered Rs 10.76 crore.
The company also paid Rs 31.77 lakhs in interest and penalty of Rs 13.3 lakhs in FY20 for evading customs duty.
Oppo
Minister of state for electronics and IT Rajeev Chandrasekhar informed that Oppo had evaded customs duty to the tune of Rs 4403.27 in FY20 and FY21 and the government recovered Rs 476.79 crore out of it.
The government has also detected GST evasion to the tune of Rs 683.04 crore by Oppo, and has recovered Rs 738.04 crore.
Vivo
Vivo has been accused of evading Rs 2,875 crore in customs duties in FY21 and FY23.
The government recovered Rs 117 crore from the company for the same.
In terms of GST, it has evaded Rs 48.25 crore, with part of the evasion still being processed.
So far, the government has recovered Rs 51.25 crore for the same.
Manner of evasion
The matter of this evasion came up last year when the Finance Ministry said that it is looking into cases of alleged tax evasion by Oppo, Vivo India and Xiaomi.
It found that Oppo had misdeclared certain imported goods, leading to a short payment in customs duty. Through this it availed wrongful duty exemption benefits amounting to Rs 2,981 crore.
Xiaomi received three show cause notices for the recovery of duty amounting to Rs 653 crore.
It was found to be evading customs duty by way of undervaluation.
