Volkswagen India Unit Faces $1.4 Billion Tax Evasion Notice
ECONOMY & POLICY

Volkswagen India Unit Faces $1.4 Billion Tax Evasion Notice

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’s 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’s 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 “responsible organization, fully complying with all global and local laws and regulations,” adding, “We are analyzing the notice and extending our full cooperation to the authorities.”

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’s "show cause notice" demands that Volkswagen’s 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.

"Join industry leaders at RAHSTA Expo, India's premier platform for roads, highways and traffic infrastructure. Register now to explore innovations, network with experts and shape the future of mobility."

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’s 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’s 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 “responsible organization, fully complying with all global and local laws and regulations,” adding, “We are analyzing the notice and extending our full cooperation to the authorities.” 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’s show cause notice demands that Volkswagen’s 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
Infrastructure Urban

ABS Marine Sees CRISIL Credit Rating Upgrade

ABS Marine Services has secured an upgrade to its long term and short term credit ratings from CRISIL, reflecting improved profitability and revenue growth through long term contracts. CRISIL moved the long term rating from BBB+/Stable to A-/Stable and revised the short term rating from A2 to A2+. The action signals strengthened financial metrics and operational resilience. The company benefited from durable client relationships with firms such as ONGC and Schlumberger. The rating decision followed stronger cash flows and an enlarged bank loan facility, which increased from Rs 3,705 million (m..

Next Story
Infrastructure Transport

Project BRAHMANK Marks 16 Years Of Strategic Roads In Arunachal

Project BRAHMANK is marking 16 years of work to establish strategic road and bridge links across Arunachal Pradesh, maintaining and developing 811 kilometres of roads and nearly 86 bridges that range from small culverts to large steel and arch bridges. These transport links are described as critical for ensuring year-round movement of defence personnel, equipment and essential supplies while improving everyday travel for people in remote villages. The project balances national security requirements with regional development by focusing on reliable access in challenging terrain. Notable enginee..

Next Story
Infrastructure Transport

Longleng CSOs Give One Week Ultimatum Over Two-Lane Highway

Civil society organisations (CSOs) in Longleng district have demanded immediate restoration of the deteriorating Changtongya–Longleng two-lane road and sought a detailed status report on the stalled construction within one week. The demand followed a consultative meeting convened under the Phom Peoples' Council (PPC) to discuss welfare and development concerns. PPC president YB Angam Phom said prolonged non-maintenance had caused hardship to commuters and affected transportation, local commerce and the district's development. The meeting urged authorities to undertake immediate restoration a..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement