Big blow to Xiaomi India, DRI serves notice of Rs 653 crore for tax evasion

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Xiaomi India is in trouble once again. The latest development reveals that the Indian government has slapped Chinese smartphone maker Xiaomi with a Rs 653 crore notice for tax evasion. According to a Press Trust of India (PTI) report, the Finance Ministry on Wednesday confirmed the development.

As per reports, Directorate of Revenue Intelligence (DRI) has issued three cause notices to Xiaomi India for recovery of Rs 653 crore for the period 01.04.2017 to 30.06.2020 under the provisions of Customs Act, 1962.

“After completion of investigation by DRI, three show cause notices have been issued to M/s Xiaomi Technology India Pvt Ltd demanding and recovering a fee of Rs. 653 crore for the period 01.04.2017 to 30.06.2020 under the provisions of the Customs Act, 1962,” said the official statement from the Ministry of Finance.

In the past month, DRI conducted several searches at the Xiaomi India office as well as its supplier’s factory. The report reveals that DRI recovered incriminating documents from the premises of Xiaomi India, indicating that the company remitted royalties and license fees to Qualcomm USA and Beijing Xiaomi Mobile Software under contractual obligation.

“Statements of key individuals from Xiaomi India and its contract manufacturers were recorded, during which one of the directors of Xiaomi India confirmed the said payment,” the finance ministry said.

The Ministry further highlighted that “royalties and license fees” paid by Xiaomi India to Qualcomm USA and Beijing Xiaomi Mobile Software, China were not added to the transaction value of goods imported by Xiaomi India and its contract manufacturers Was.

The DRI investigation found that “Xiaomi India is engaged in the sale of MI brand mobile phones and these mobile phones are either imported by Xiaomi India or by contract manufacturers of Xiaomi India by importing mobile phone parts and components to India.” are assembled.”

The DRI further pointed out that neither Xiaomi India nor the contract manufacturer was adding the royalty amount paid by Xiaomi India to the assessable value of the goods imported by Xiaomi India and its contract manufacturer. This is a clear violation of section 14 of the Customs Act, 1962 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

The finance ministry explained that by not adding “royalties and license fees” to the transaction value, Xiaomi India was “avoiding customs duties by being the beneficial owner of such imported mobile phones, parts and components”.

Big blow to Xiaomi India, Rs 653 crore notice for tax evasion by DRI first appeared on BGR India.

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