Accusing Samsung of misclassifying components to dodge duties, India fines the tech giant $601 million for evading telecom import tariffs.
The Indian government has instructed Samsung and its executives to pay $601 million in back taxes and penalties for evading tariffs on critical telecom equipment imports. According to the Economic Times, this demand is one of the largest in recent years, accounting for a significant portion of Samsung’s $955 million net profit in India for the previous year.
The company, a major player in consumer electronics and smartphones in the country, has the option to challenge the decision in a tax tribunal or court.
The issue stems from Samsung’s misclassification of telecom components in 2023 to bypass tariffs ranging from 10 to 20 per cent on key transmission parts used in mobile towers. These components were sold to Reliance Jio, a telecom company owned by billionaire Mukesh Ambani.
Samsung argued that the components were not subject to tariffs, pointing out that its classification practices had been known to Indian authorities for years.
However, India’s customs authorities disagreed, stating that Samsung had knowingly submitted false documents to evade duties. They accused the company of violating Indian laws and acting unethically to maximise profits by defrauding the government.
Samsung has been ordered to pay 44.6 billion rupees ($520 million) in unpaid taxes and an additional penalty of 100 per cent. In addition, seven Samsung executives, including key officials from its network division and finance team, face fines totalling $81 million.
The investigation began in 2021 when tax inspectors raided Samsung’s offices in Mumbai and Gurugram, seizing documents and questioning executives. At the heart of the dispute is Samsung’s importation of ‘Remote Radio Head’ components, which are used in 4G telecom systems.
Indian officials argue that these components are subject to tariffs, while Samsung maintains that they are exempt.
The case is part of a broader trend of increased scrutiny by Indian authorities on foreign companies’ imports, with similar disputes involving companies like Volkswagen.
