Chinese smartphone brands Oppo, Vivo India & Xiaomi under tax sleuths' lens
Mumbai: Chinese smartphone makers have once again come under the scanner of Indian agencies for cases of alleged tax evasion. Notices have been issued to Oppo, Vivo India and Xiaomi, finance minister Nirmala Sitharaman informed Rajya Sabha recently. The three Chinese mobile phone companies, between them, hold a major share of the Indian smartphone market.
The Finance Minister said that the department of revenue intelligence (DRI) has issued a notice to Oppo for a total customs duty of Rs 4,389 crore. This is on the grounds that misdeclaration of certain goods leads to a short payment in customs duty.
The duty evasion is about Rs 2,981 crore, Sitharaman said replying to a question in the Upper House.
"Undervaluation of imported goods for the purpose of payment of customs duty, that we think is an evasion of Rs 1,408 crore," she said.
She stated that they came voluntarily to deposit Rs 450 crore, much less than the demand of Rs 4,389 crore.
Regarding the other companies, she said Xiaomi, which deals with assembling MI mobile phones, has been issued three show-cause notices.
"The approximate duty liability there is about Rs 653 crore. For the three show cause notices that have been issued, they have deposited only Rs 46 lakh," the minister said.
She informed Rajya Sabha that a demand notice has been issued for Rs 2,217 crore for which they have deposited Rs 60 crore as a voluntary deposit.
"Besides these, the ED is looking at 18 companies that were established by the same group as Vivo, and there they have voluntarily remitted Rs 62 crore as deposits, but the parent company outside of India has total sales of 1.25 lakh crore.
"Of the Rs 1.25 lakh crore total sales, Vivo has transferred through these 18 companies huge amounts of funds, and it is believed that Vivo India has, in turn, remitted 0.62 lakh crore to its parent company, which is outside India," Sitharaman said.
In her written reply, the finance minister said a show cause notice demanding Rs 4,403.88 crore has been served on Oppo Mobiles India based on the investigation conducted by the directorate of revenue intelligence (DRI).
Five cases of customs duty evasion have been booked against Xiaomi Technology India, she said.
"During the period 2019 to 2022, in respect of the central board of indirect taxes & customs (CBIC), cases against 43 other such companies have been booked."
"'As regards to the central board of direct taxes (CBDT), investigation directorates have undertaken search and seizure actions in cases of five groups pertaining to the telecom sector, in which tax evasion has been detected," Sitharaman added.
Meanwhile, the market share of these three brands, which make up the top five smartphone brands in India, has been steadily growing, despite the scrutiny. Xiaomi remained the market leader in 2022 with a share of 24 per cent, followed by Vivo with 18 per cent share and Oppo with a ten per cent share, according to a report by Cyber Media Research (CMR). The three brands, along with Realme and Korean smartphone major Samsung, account for nearly three quarters of India's smartphone market.