India has ordered Samsung and its executives within the nation to pay $601 million (roughly Rs. 5,149 crore) in again taxes and penalties for dodging tariffs on import of key telecoms tools, a authorities order confirmed, for one of many largest such calls for in recent times.
The demand represents a considerable chunk of final yr’s internet revenue of $955 million (roughly Rs. 8,183 crore) for Samsung in India, the place it is likely one of the largest gamers within the client electronics and smartphones market. It may be challenged in a tax tribunal or the courts.
The corporate, which additionally imports telecoms tools by its community division, obtained a warning in 2023 for misclassifying imports to evade tariffs of 10 p.c or 20 p.c on a crucial transmission part utilized in cellular towers.
It imported and bought this stuff to billionaire Mukesh Ambani’s telecom large, Reliance Jio.
Samsung pushed India’s tax authority to drop the scrutiny, saying the part didn’t appeal to tariffs and officers had identified its classification follow for years.
However customs authorities disagreed in a confidential January 8 order that isn’t public however was reviewed by Reuters.
Samsung “violated” Indian legal guidelines and “knowingly and deliberately introduced false paperwork earlier than the customs authority for clearance”, Sonal Bajaj, a commissioner of customs, stated within the order.
Investigators discovered that Samsung “transgressed all enterprise ethics and trade practices or requirements with a view to obtain their sole motive of maximising their revenue by defrauding the federal government exchequer,” Bajaj added.
Samsung was ordered to pay 44.6 billion rupees ($520 million), consisting of unpaid taxes and a penalty of 100%.
Seven India executives face fines of $81 million (roughly Rs. 694 crore), amongst them the community division’s vice chairman, Sung Beam Hong, Chief Monetary Officer Dong Received Chu and Sheetal Jain, a basic supervisor for finance, in addition to Nikhil Aggarwal, Samsung’s basic supervisor for oblique taxes, the order confirmed.
“The difficulty entails the interpretation of classification of products by customs,” Samsung stated in a press release, including that it complied with Indian legal guidelines. “We’re assessing authorized choices to make sure our rights are totally protected.”
India’s customs authority and the finance ministry didn’t reply to Reuters’ queries. Reliance additionally didn’t reply.
The incident comes as India toughens oversight of international corporations and their imports.
Volkswagen and New Delhi are locked in a authorized battle by which the automaker is difficult a file demand of $1.4 billion (roughly Rs. 11,995 crore) in import again taxes on grounds of misclassifying automotive components.
The German firm denies any wrongdoing in what it referred to as a “matter of life and demise” for its India enterprise, however the dispute has rekindled international traders’ fears over tax tussles.
Distant Radio Head
The Samsung investigation started in 2021 when tax inspectors searched its workplaces within the monetary capital of Mumbai and Gurugram close to New Delhi, seizing paperwork, emails and a few digital gadgets. Prime executives had been later questioned.
The Samsung dispute facilities on imports of the “Distant Radio Head”, a radio-frequency circuit enclosed in a small outside module that tax officers referred to as “one of the vital essential” components of 4G telecoms techniques.
From 2018 to 2021, Indian officers discovered, Samsung paid no dues on imports price $784 million (roughly Rs. 6,717 crore) of the part from Korea and Vietnam.
The part fitted on telecoms towers transmits indicators and is topic to a tariff, the federal government stated, although Samsung disagreed on the way it features.
Samsung vehemently defended its classification, backed its case with 4 knowledgeable opinions, saying the part didn’t carry out the features of a transceiver and might be imported with none responsibility, the tax order stated.
As counter proof, tax officers cited 2020 letters from Samsung to the Indian authorities describing the part as a transceiver, which the federal government stated is “a tool which transmits” indicators.
Samsung “was very a lot aware of the suitable classification of the impugned items,” the tax commissioner added.
© Thomson Reuters 2025
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