New Delhi, Dec 31 (SocialNews.XYZ) The Income Tax Department (IT-D) on Friday carried out searches across India against the foreign-controlled cellphone manufacturing companies for their alleged involvement in tax evasion.
"Certain foreign-controlled mobile communication and mobile hand-set manufacturing companies and their associated persons were raided by our team. The raids were conducted in Karnataka, Tamil Nadu, Assam, West Bengal, Andhra Pradesh, Madhya Pradesh, Gujarat, Maharashtra, Bihar, Rajasthan, and Delhi-NCR," said an IT-D official.
The Income Tax searches revealed that two major companies have made remittance in the nature of royalty, to and on behalf of its group companies located abroad, which aggregates to more than Rs 5,500 crore.
It was found that these companies had not complied with the regulatory mandate prescribed under the Income Tax Act, for disclosure of transactions with associated enterprises.
"Such lapse makes them liable for penal action under the Income Tax Act, the quantum of which could be in the range of more than Rs 1,000 crore," an official said.
"Foreign funds have been introduced in the books of the Indian company but it transpires that the source from which such funds have been received are of doubtful in nature, purportedly with no credit worthiness of the lender. The quantum of such borrowings is about Rs 5,000 crore," said the official.
The official said that they have collected evidence with regards to the inflation of expenses, payments on behalf of the associated enterprises, which led to the reduction of taxable profits of the Indian mobile handset manufacturing company. This amount could be in excess of Rs 1,400 crore.
One of the companies utilised the services of another entity located in India but did not comply with the provisions of tax deduction. The quantum of liability of TDS on this account could be around Rs 300 crore.
One Indian company which was raided on Friday, had no role in management and was being controlled by a neighbouring country. It transferred Rs 42 crore out of India without payment of due taxes.
Raids at fintech and software services companies revealed that a number of such companies have been created for the purposes of inflating expenses and siphoning out of funds.
"These companies made payments for unrelated business purposes, and utilised the bills issued by a Tamil Nadu-based non-existent business concern.The quantum of such out-flow is found to be around Rs 50 crore," said an official.
Meanwhile, reacting to the I-T raids, the spokesperson of smartphone manufacturer, Xiaomi, said: "As a responsible company, we give paramount importance to ensuring that we are compliant with all Indian laws. As an invested partner in India, we are fully cooperating with authorities to ensure they have all the required information."
Source: IANS
About Gopi
Gopi Adusumilli is a Programmer. He is the editor of SocialNews.XYZ and President of AGK Fire Inc.
He enjoys designing websites, developing mobile applications and publishing news articles on current events from various authenticated news sources.
When it comes to writing he likes to write about current world politics and Indian Movies. His future plans include developing SocialNews.XYZ into a News website that has no bias or judgment towards any.
He can be reached at gopi@socialnews.xyz