Several Chinese handset makers, including Xiaomi, Realme, Oppo, Vivo, and Oneplus, have allegedly evaded significant amounts of Goods and Services Tax (GST) and customs duties over the past five years. According to the government's statement, they have collectively evaded ₹1,108.98 crore in GST and ₹7,966.09 crore in custom duties between the financial years 2017-18 and 2023-24 (up to July 1).
In response to these alleged tax evasion cases, the government has taken action by issuing show cause notices to the companies and initiating investigations. The aim is to hold these companies accountable for their tax obligations. The Minister of State for Electronics and Information Technology, Rajeev Chandrasekhar, mentioned that the companies are being persuaded to deposit the tax amount, interest, and penalty as applicable.
In the case of Xiaomi, in the financial year 2018-19, the company reportedly evaded customs duty of ₹89 lakh, which it eventually paid along with interest and penalty. However, in the following financial year 2019-20, Xiaomi is alleged to have evaded a much larger amount of ₹653.02 crore in customs duty, of which it has paid only ₹46 lakh. The government has issued a show cause notice to Xiaomi regarding this shortfall, indicating that an investigation is underway.
Similarly, Oppo Mobile India and Vivo India are also alleged to have evaded substantial amounts of customs duties, with Oppo evading ₹4,389 crore and Vivo evading ₹2,217 crore during the financial year 2020-21. They have paid only a small fraction of the amounts they are alleged to have evaded, and show cause notices have been issued to both companies.
Additionally, most of these companies are accused of evading GST payments. Xiaomi allegedly evaded ₹168.63 crore in GST, of which the government has recovered only ₹82.4 crore. Oppo evaded ₹683.04 crore in GST, and although it has paid most of the amount, the government is yet to recover interest and penalty as applicable.
Furthermore, Lenovo India is also accused of evading ₹42.36 crore in GST and has not paid anything yet.
On another note, these Chinese handset makers have set up their manufacturing units in India and work with contract manufacturers. They have a significant presence in India, with a cumulative turnover estimated to be ₹1.5-lakh crore in the financial year 2021-22. These companies have generated a substantial number of direct employment opportunities through their manufacturing operations, employing over 75,000 workers. They also have sales and operational workforce of around 80,000 workers.
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