Samsung gets tax notice of ₹5,150 crore: Accused of tampering with import tariff, government fines 7 company officials

The Indian government has sent a tax demand notice of $601 million i.e. Rs 5,150 crore to Samsung and its officials. This is the biggest tax demand notice sent to any company in recent years.

The government said in an order that Samsung and its officials had used unfair means to avoid tariffs on import of key telecom equipment. However, now the company and officials will have to pay the previous tax and penalty.

The company can challenge the order in the tax tribunal or court

The company can challenge this order of the government in the tax tribunal or court. This tax demand is a major part of Samsung’s net profit of $955 million i.e. Rs 8,183 crore last year in India. Samsung is one of the largest companies in India’s consumer electronics and smartphone market.

₹693 crore fine imposed on 7 company officials

Samsung was ordered to pay $520 million (Rs 4,451 crore), which includes outstanding taxes and a 100% penalty. Apart from this, a fine of $81 million (Rs 693 crore) has been imposed on seven company officials in India.

These officials also include the names of Network Division Vice Chairman Sung Beam Hong, Chief Financial Officer Dong Won Chu, General Manager for Finance Sheetal Jain and General Manager for Indirect Tax of Samsung Nikhil Agarwal.

Warning was received in 2023 for misclassifying imports

Samsung was warned in 2023 for misclassifying imports to avoid tariffs of 10% or 20% on transmission components required for mobile towers.

The company imports telecom equipment through its network division. The company then imported these items and sold them to billionaire Mukesh Ambani’s telecom giant Reliance Jio.

Samsung pressured India’s tax authority to end the investigation

Samsung had pressured India’s tax authority to end the investigation. The company had then said that there was no tariff on the components and the authorities were aware of its classification practice for years. However, the Customs Authority disagreed with the company’s statement in an order on January 8.

Samsung violated Indian laws: Commissioner of Customs

Commissioner of Customs Sonal Bajaj said that Samsung has violated Indian laws. Apart from this, the company has deliberately submitted false documents for clearance to the Customs Authority. Investigators found that Samsung has violated all business ethics, industry practices and standards.