+
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.

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 Energy

REC Hosts 56th AGM, Highlights Record Growth and Sustainability

REC Limited conducted its 56th Annual General Meeting (AGM) today through video conferencing, chaired by Jitendra Srivastava, Chairman & Managing Director. The meeting highlighted the company’s record operational and financial performance during the year, along with its strong focus on sustainability and ESG-led initiatives.Jitendra Srivastava, Chairman & Managing Director, in his address noted that REC achieved significant milestones during the year, strengthening its position as a performance-driven public financial institution. Loan sanctions stood at Rs 3.37 trillion, with disbur..

Next Story
Infrastructure Transport

ADGBR Reviews Road Projects under Project Vartak

Additional Director General Border Roads (ADGBR) Jitendra Prasad conducted a four-day review of ongoing road and bridge construction works under Project Vartak in the area of responsibility (AoR) of the 42 Border Roads Task Force (BRTF) from 19 to 22 August.Prasad inspected key infrastructure projects including the Balipara–Charduar–Tawang (BCT) road, Sela–Chabrela–Banga Janga Gonpa road, Banga Janga Gonpa–Lagamche GG road, the Sela tunnel, and multiple roads in the Nelya sector.At various construction sites, project officials briefed him on project scope, progress, timelines, and op..

Next Story
Infrastructure Transport

Nitin Gadkari Launches Three Highway Projects in Madhya Pradesh

Union Minister for Road Transport and Highways, Nitin Gadkari, laid the foundation stone for three National Highway (NH) projects in Madhya Pradesh on 24 August. According to the Ministry of Road Transport and Highways (MoRTH), the projects are designed to reduce travel time, ease congestion, enhance road safety, and improve connectivity across key corridors.The first project covers the four-laning of the 17.87 km Amazhar–Barela stretch, completing the Jabalpur Ring Road. The upgrade will divert heavy vehicles away from the city, reduce accident risks, and ensure smoother connectivity from A..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?