SKODA caught..? 1.4 billion dollar tax evasion..!?

German carmaker volkswagen is currently facing serious challenges in India. While it was already facing various threats such as a trade slowdown in Germany, increasing competition from Chinese manufacturers, labor issues, and the US government's tariffs on Mexico, it was growing steadily in India. But this too has a problem. SKODA - volkswagen Group is trying to expand its presence in india despite various challenges. With an aim to improve the operational efficiency of the alliance companies and increase market share, in 2019, the company merged its three indian subsidiaries - volkswagen, Skoda, and audi - into a single entity, Skoda auto volkswagen india Limited. This company has now been slapped with a notice worth $1.4 billion. The indian government has recently sent a notice to Volkswagen. It has been accused of evading import duty worth about $1.4 billion by misclassifying imported parts for audi, volkswagen, and Skoda vehicles. Generally, volkswagen, Skoda, and audi brands do not manufacture their cars in india but import them as components and then assemble them locally. Such incompletely assembled vehicle parts (CKD units) attract an import duty of 30-35%.
However, Skoda auto volkswagen india Limited has been accused of importing these as "individual parts" and paying a lower import duty of 5-15%. government officials say this misclassification has reduced tax payments. The notice issued by the government alleges that Volkswagen's indian unit is operating through an "artificial arrangement" to avoid paying the correct import duties. indian authorities have estimated that volkswagen should have paid $2.35 billion in import duties and other charges since 2012. But it has paid only $981 million. This has resulted in an evasion of $1.36 billion, the government says. Responding to the allegations, Skoda auto volkswagen india said it is working to fully comply with all rules and regulations. The company said it will continue to cooperate and work with indian government authorities to clarify and rectify the allegations raised in the notice sent by the government. The tax issue poses a serious challenge to Volkswagen's india operations. The outcome of the investigation will have a significant impact on the company's future plans and its ability to compete in the indian automobile market.

On the other hand, due to this case, about 50 containers, which contain parts for Skoda, volkswagen, and audi cars, are parked at the port. This has affected the production and trade of Skoda India. In this situation, volkswagen has filed a case in the supreme court against the notice issued by the indian government regarding the due tax of $ 1.4 billion. In a statement, Skoda auto volkswagen india said, "We will take all legal action against the notice." This case will pose a serious challenge to Volkswagen's operations in India. The verdict in the case will have a significant impact on the company's future plans and its ability to compete in the indian automotive market.
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Sowmiya Sriram

04/02/2025 10:25 AM