German automobile manufacturing group Volkswagen has been accused of tax evasion of around Rs 12,000 crore in India. Indian authorities have accused Volkswagen Group, the parent company of brands like Volkswagen, Audi, Skoda, Porsche and Lamborghini, of tax evasion to the tune of $1.4 billion or about 11,865 crore rupees.
India's Skoda Auto Volkswagen is one of the Volkswagen Group companies accused of rigging import duties. As mentioned in the complaint, the car models involved in this manipulation are Audi's A4, A6 sedan and Q5, Q7 SUV (sports utility vehicle), Skoda Octavia and Superb sedan and Kodiak SUV and Volkswagen's Tiguan SUV.
Indian authorities said that after a detailed investigation, they found that Volkswagen had deliberately and 'knowingly' documented their imports in such a way that they could avoid higher tax levels. Allegedly, some materials were imported under low duty category. Volkswagen, however, denied the allegations and claimed that they comply with all local laws and are fully cooperating with the authorities.
A 35 percent import duty is imposed on imports of fully disassembled car parts to encourage local manufacturing in India. These parts are imported in separate forms and assembled into vehicles at various manufacturing plants in India.
On the other hand, if some parts of a car are locally manufactured and some components are imported, then the import duty on those components is between 5 percent and 15 percent. If a complete vehicle is imported directly from abroad, 100 percent import duty is payable on it. Due to these high tariffs, several international car manufacturers have set up production plants in India in the last few decades.
Indian authorities claimed that, after detailed investigation, they found that Volkswagen had deliberately declared the parts as 'discrete parts' to avoid 30-35 per cent duty on imported units of completely disassembled car parts. And 5-15 percent less duty has been given on this individual segment. Authorities also said that Volkswagen imported 97 percent of the parts it called 'individual components'. About one and a half billion dollars in taxes have been evaded.
