Authorities Recover Only 8% of ₹8000cr Tax Evasion Done by Chinese Smartphones Companies

New Delhi, 22nd July 2023: The Finance Ministry notified the parliament on Friday that major Chinese smartphone manufactures such as Xiaomi, Vivo, and Oppo have dodged customs charges and made illegal remittances in India totaling at least Rs 8,000 crore. Only 8% of the total sum avoided by these corporations has been collected by the tax authorities.

The ministry stated in a written reply to the Rajya Sabha that Xiaomi Technology Pvt Ltd evaded a total of Rs 653 crore in 2019-20, Rs 23.99 crore in 2020-21, and Rs 4.61 crore in 2022-23. Between 2017 and 2021, Oppo Mobile Pvt Ltd avoided customs charges worth Rs 4,403 crore.

Only Rs 604.55 crore, or around 8% of the entire money evaded, has been recovered by the tax authorities out of the total Rs 8,000 crore evasion.

Furthermore, the ministry has discovered 13 cases of enterprises engaging in GST avoidance from July 2017 to June 2023. According to the data, the authorities were able to recover roughly Rs 1025 crore of the Rs 1108 crore in GST that was avoided.

The ministry stated in a reply, “The major Chinese mobile handset brands which are operating in India are Oppo, Vivo, Xiaomi, Transsion (operates three brands in India viz. Itel, Tecno and Infinix), Realme and Oneplus. Their cumulative turnover in 2021-22 was estimated to be Rs 1.5 lakh crore in India.”

The ministry added, “ The total direct employment generated by them in their manufacturing operations is more than 75,000. They also have sales and operational workforce of around 80,000 workers. The distribution of mobile handsets is mainly handled by Indian companies, however some of the Chinese companies like Oppo and Vivo have some Chinese distributors also.”

According to the ministry, Xiaomi paid duty, interest, and penalties totaling Rs. 31,77,721 in 2019-20. All Chinese smartphone manufacturing companies have received show cause notices for customs duty evasion.

Last year, the Finance Ministry stated that it is investigating incidents of potential tax fraud by three Chinese mobile phone companies: Oppo, Vivo India, and Xiaomi.

During the Monsoon session of parliament last year, the ministry stated that the Department of Revenue Intelligence (DRI) had given a notice to Oppo due to mis-declaration of some items, resulting in a short payment of customs duty.

In July 2022, the DRI reported that Oppo India received unlawful duty exemption benefits totaling Rs 2,981 crore due to mis-declaration of certain imported items.

Following the DRI probe, Xiaomi received three show cause letters for the recovery of duty totaling Rs 653 crore from April 1, 2017 to June 30, 2020. The mobile company was discovered to be dodging customs duty through undervaluation.