Volkswagen is currently facing scrutiny, in India as tax authorities have accused the automaker of engaging in a ” strategy” to evade duties for more, than 12 years by incorrectly categorizing imported car components to reduce tax payments—a move that has led to a $1..4 billion tax claim now potentially escalating to $2..8 billion including fines and interest charges.
During Volkswagens battle, with the government in the Bombay High Court a key concern arose regarding the tax dispute deemed crucial for the companys operations. The Indian officials contended that Volkswagen purposely divided the import of vehicle parts into shipments to lessen import taxes. By bringing in components, than assembled vehicles Volkswagen was able to benefit from reduced tax rates as a strategic approach.
The records submitted to the government mention 10 car manufacturers such, as Mercedes Benz and BMW that accurately categorized their imports despite employing “split consignments” to deliver parts.Though Kia Motors was being looked into for actions, before this incident. Managed to rectify its import labeling after being hit with a $155 million tax bill linked to its Carnival minivan.
Volkswagen has disputed the accusations by pointing fingers at authorities for taking 12 years to examine their shipment records of submitting the necessary documents on time as claimed by tax officials.
The Bombay High Court is, on the verge of announcing a verdict that could hold Volkswagen liable for billions of dollars in damages. If Volkswagen is indeed found to be at fault it may encounter one of the tax fines ever imposed in Indias automotive sector, which could have far reaching effects, on its business activities and standing in the nation.
