NEW DELHI: Tax authorities have ordered Samsung and its executives in the country to pay $601 million (nearly Rs 5,150 crore) in back taxes and penalties for dodging tariffs on import of key telecoms equipment, a govt order showed, for one of the biggest such demands in recent years. The demand represents a substantial chunk of last year’s net profit of $955 million for Samsung in India. It can be challenged in a tax tribunal or the courts.
The company, which also imports telecom equipment through its network division, received a warning in 2023 for misclassifying imports to evade tariffs of 10% or 20% on a critical transmission component used in mobile towers.
Samsung pushed tax authority to drop the scrutiny, saying the component did not attract tariffs and officials had known its classification practice for years. But customs authorities disagreed in a confidential Jan 8 order that is not public but was reviewed by Reuters.
Samsung “violated” Indian laws and “knowingly and intentionally presented false documents before the customs authority for clearance”, Sonal Bajaj, a commissioner of customs, said in the order.
Samsung was ordered to pay Rs 4,460 crore ($520 million), consisting of unpaid taxes and a penalty of 100%.
Seven India executives face fines of $81 million, among them the network division’s vice president, Sung Beam Hong, chief financial officer Dong Won Chu and Sheetal Jain, a general manager for finance, as well as Nikhil Aggarwal, Samsung’s general manager for indirect taxes, the order showed.
“The issue involves the interpretation of classification of goods by customs,” Samsung said in a statement, adding that it complied with Indian laws. “We are assessing legal options to ensure our rights are fully protected.”
(Reuters)