'Duty evasion' by Chinese phone firms in India under lens

The government is looking into alleged duty evasion by Chinese smartphone manufacturers Oppo Mobiles, Vivo India and Xiaomi, finance minister Nirmala Sitharaman informed the Rajya Sabha on Tuesday.

Action is also being taken against dubious digital loan apps, including those originating from outside the country, she said during question hour.

Sitharaman said the Directorate of Revenue Intelligence (DRI) had issued a ₹4,389 crore customs duty demand notice to Oppo India.


"Duty evasion, we think, is about ₹2,981 crore... Undervaluation of imported goods for the purpose of payment of customs duty, that we think is an evasion of ₹1,408 crore," she said.

The company had voluntarily deposited ₹450 crore against the ₹4,389 crore demand.

Search and Seizure Ops
Three show-cause notices have been issued to Xiaomi and the total duty liability on the company is ₹653 crore. The company has deposited ₹46 lakh, the minister said.

The demand on Vivo India is for ₹2,217 crore, against which it has given ₹60 crore as a voluntary deposit, she informed the house.

The Directorate of Enforcement (ED) is also looking at 18 companies established by Vivo that have remitted large amounts of money from India.

"Of ₹1.25 lakh crore, which is the total sale, Vivo has transferred through these 18 companies a huge amount 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 to the main question, the finance minister said a show-cause notice demanding ₹4,403.88 crore has been served on Oppo Mobiles India based on the investigation conducted by the DRI. Five cases of customs duty evasion have been booked against Xiaomi Technology India, according to the reply.

DRI investigations are taking place against many telecom companies with 68 cases related to customs duty evasion adding up to ₹1,342 crore, she said. They also involve goods and services tax (GST) demands of ₹591 crore and services tax-related evasion of Rs 5.58 crore, the minister said.

"The CBDT (Central Board of Direct Taxes) and CBIC (Central Board of Indirect Taxes & Customs) are all acting on that," Sitharaman said.

She said the CBDT investigation directorate has undertaken search and seizure operations against five groups in the telecom sector over tax evasion.

The FM said the government is moving against dubious digital loan apps, including those originating from outside the country.

She made the remarks in the Rajya Sabha after a member cited reports that dubious digital loan apps with links to China have been lending money without following the Reserve Bank of India guidelines.