Volkswagen India Unit Faces $1.4 Billion Tax Evasion Notice
04 Dec 2024
2 Min Read
CW Team
India has issued a $1.4 billion tax evasion notice to German automaker Volkswagen for allegedly underreporting import taxes on components for its Audi, VW, and Skoda models, a document reveals. This is one of the largest such demands in India.
According to a notice dated Sept. 30, Volkswagen imported "almost the entire" car in unassembled form. These "completely knocked down" (CKD) units are subject to an import tax of 30-35%, but Volkswagen allegedly mis-declared these shipments as "individual parts," paying just 5-15% duty instead. The imports, handled by Volkswagen鈥檚 local unit, Skoda Auto Volkswagen India, involved models such as the Skoda Superb and Kodiaq, Audi A4 and Q5, and VW Tiguan SUV. Multiple consignments were used to evade detection and avoid paying higher taxes, as confirmed by India's investigation.
The notice, a 95-page document issued by Maharashtra鈥檚 Commissioner of Customs, states, "This logistical arrangement is an artificial arrangement ... operating structure is nothing but a ploy to clear the goods without the payment of the applicable duty," the document said. The notice, seen by Reuters, is not publicly available.
Since 2012, Volkswagen's Indian unit should have paid around $2.35 billion in import taxes and related levies but paid only $981 million, leaving a gap of $1.36 billion, according to the Indian authority.
In response, Skoda Auto Volkswagen India said it is a 鈥渞esponsible organization, fully complying with all global and local laws and regulations,鈥� adding, 鈥淲e are analyzing the notice and extending our full cooperation to the authorities.鈥�
The notice gives Volkswagen 30 days to respond. However, it remains unclear whether the company has done so yet.
Neither India's finance ministry nor the customs department responded to Reuters' queries.
The government鈥檚 "show cause notice" demands that Volkswagen鈥檚 local unit explain why it should not face penalties and interest on the $1.4 billion in evaded duties. An anonymous government official indicated that penalties could reach up to 100% of the amount evaded, potentially totaling $2.8 billion.
High taxes and ongoing legal challenges have often been contentious for foreign companies in India. For example, electric car maker Tesla has long complained about high taxes on imported vehicles, while Vodafone has battled tax disputes. Chinese automaker BYD is also under investigation in India for tax underpayment of about $9 million on imports.
India has issued a $1.4 billion tax evasion notice to German automaker Volkswagen for allegedly underreporting import taxes on components for its Audi, VW, and Skoda models, a document reveals. This is one of the largest such demands in India.
According to a notice dated Sept. 30, Volkswagen imported almost the entire car in unassembled form. These completely knocked down (CKD) units are subject to an import tax of 30-35%, but Volkswagen allegedly mis-declared these shipments as individual parts, paying just 5-15% duty instead. The imports, handled by Volkswagen鈥檚 local unit, Skoda Auto Volkswagen India, involved models such as the Skoda Superb and Kodiaq, Audi A4 and Q5, and VW Tiguan SUV. Multiple consignments were used to evade detection and avoid paying higher taxes, as confirmed by India's investigation.
The notice, a 95-page document issued by Maharashtra鈥檚 Commissioner of Customs, states, This logistical arrangement is an artificial arrangement ... operating structure is nothing but a ploy to clear the goods without the payment of the applicable duty, the document said. The notice, seen by Reuters, is not publicly available.
Since 2012, Volkswagen's Indian unit should have paid around $2.35 billion in import taxes and related levies but paid only $981 million, leaving a gap of $1.36 billion, according to the Indian authority.
In response, Skoda Auto Volkswagen India said it is a 鈥渞esponsible organization, fully complying with all global and local laws and regulations,鈥� adding, 鈥淲e are analyzing the notice and extending our full cooperation to the authorities.鈥�
The notice gives Volkswagen 30 days to respond. However, it remains unclear whether the company has done so yet.
Neither India's finance ministry nor the customs department responded to Reuters' queries.
The government鈥檚 show cause notice demands that Volkswagen鈥檚 local unit explain why it should not face penalties and interest on the $1.4 billion in evaded duties. An anonymous government official indicated that penalties could reach up to 100% of the amount evaded, potentially totaling $2.8 billion.
High taxes and ongoing legal challenges have often been contentious for foreign companies in India. For example, electric car maker Tesla has long complained about high taxes on imported vehicles, while Vodafone has battled tax disputes. Chinese automaker BYD is also under investigation in India for tax underpayment of about $9 million on imports.
Next Story
Mumbai-Ahmedabad Bullet Train Set to Launch by 2028
India鈥檚 first bullet train is set to revolutionize high-speed travel along the western corridor, with the Mumbai-Ahmedabad high-speed rail project aiming for a 2028 launch. This announcement marks a major milestone in India鈥檚 infrastructure goals, as it promises to reduce travel time between the two economic hubs from eight hours to just three.Spanning a planned 508-kilometre stretch, the corridor stands as a flagship example of Indo-Japanese collaboration in technology and engineering. Once operational, the train is expected to transform intercity mobility and place India among the select..
Next Story
Mumbai-Gandhinagar Train Service Enhances Passenger Capacity
The Mumbai Central鈥揋andhinagar Capital Vande Bharat Express has increased its passenger capacity by adding four additional AC chair car coaches to meet the growing commuter demand on one of India鈥檚 busiest business corridors. This upgrade, effective from 11 May, raised the train鈥檚 seating capacity from 1,128 to 1,440 passengers, allowing it to serve 936 more passengers daily in both directions. The increase was described as a practical measure to accommodate the surging demand on the busy Mumbai鈥揂hmedabad鈥揋andhinagar route, which regularly operates at over 150 percent seat occupancy...
Next Story
Delhi Plans 12 Sewage Plants to Clean Najafgarh Drain Efficiently
Delhi鈥檚 ambitious plan to improve the water quality of the Yamuna River has gained significant momentum as the Delhi Jal Board (DJB) has begun work on 12 new sewage treatment plants (STPs) aimed at reducing the volume of untreated sewage being discharged from the Najafgarh Drain.This initiative forms part of the ongoing efforts to clean the Yamuna and restore the river鈥檚 health, which has long been a critical environmental issue for the national capital. Given the alarming pollution levels in the Yamuna, experts and officials consider this project a vital step toward addressing the persist..
