Big Tech Xiaomi, Oppo, Vivo and Lenovo under probe over alleged GST Evasion

Over the last five years, several Chinese handset manufacturers, including Xiaomi, Realme, Oppo, Vivo, and Oneplus, have reportedly dodged considerable sums of Goods and Services Tax (GST) and customs taxes. According to the government, they avoided Rs.1,108.98 crore in GST and Rs.7,966.09 crore in customs taxes between the financial years 2017-18 and 2023-24 (up to July 1).

The government has taken action in response to these suspected tax evasion cases, issuing show cause notices to the corporations and starting investigations. The goal is to hold these corporations responsible for their tax commitments. Minister of State for Electronics and Information Technology, stated that corporations are being urged to pay the necessary tax, interest, and penalty.

In the instance of Xiaomi, the business allegedly evaded customs duty of Rs.89 lakh in the financial year 2018-19, which it subsequently paid along with interest and penalty. However, in the next financial year 2019-20, Xiaomi is accused of evading a far bigger sum of customs tax of Rs.653.02 crore, of which it paid just Rs.46 lakh. In response to this deficiency, the government has issued a show cause notice to Xiaomi, signalling that an inquiry is ongoing.

Similarly, Oppo Mobile India and Vivo India are accused of dodging significant sums of customs charges, with Oppo allegedly evading Rs.4,389 crore and Vivo allegedly evading Rs.2,217 crore during the financial year 2020-21. They have paid only a small fraction of the amounts they are alleged to have evaded, and show cause notices have been issued to both companies.

Furthermore, the majority of these businesses are suspected of evading GST payments. Xiaomi is accused of evading Rs.168.63 crore in GST, of which the government has only collected Rs.82.4 crore. Oppo evaded Rs.683.04 crore in GST, and while it has paid the majority of the sum, the government is yet to recoup interest and penalties.

In addition, Lenovo India is accused of avoiding Rs.42.36 crore in GST and has failed to pay anything.

In addition, many Chinese phone manufactures have established production facilities in India and collaborate with contract manufacturers. They have a large presence in India, with a total revenue of Rs.1.5 lakh crore expected in financial year 2021-22. Through their manufacturing activities, these enterprises have created a significant number of direct job opportunities, employing over 75,000 people. They also employ over 80,000 people in sales and operations.