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NRIPage | Articles | Volkswagen Sues Indian Authorities Over $1.4 Billion Tax Dispute | Get Business News. Grow and Thrive in the Modern Market around the world - NRI Page
Volkswagen has filed a lawsuit against Indian authorities, contesting a $1.4 billion tax demand that the company describes as "impossibly enormous" and in violation of India’s import tax regulations. The dispute centers around the classification of car imports, with Indian officials accusing Volkswagen of misclassifying imports to avoid higher customs duties. In particular, Volkswagen allegedly broke down nearly complete vehicles into individual parts, which are subject to lower taxes compared to fully assembled units.
Volkswagen denies the charges, asserting that the company was transparent about its import model, which was disclosed to Indian authorities as early as 2011. The company claims it received official confirmation and clarifications that supported the method it used. In its lawsuit filed in Mumbai High Court, Volkswagen emphasized the risk this dispute poses to foreign investment in India, warning that the tax issue could undermine investor confidence.If the court rules against Volkswagen, the total tax and penalties could rise to $2.8 billion, a sum much higher than Volkswagen India’s annual revenue and profit. The case continues to be a significant concern for Volkswagen, which is in the process of investing $1.5 billion in India.
