Volkswagen’s Indian subsidiary, Skoda Auto Volkswagen India, has been accused of dodging $1.4 billion in taxes by misclassifying imported car components as “individual parts” instead of “completely knocked down” (CKD) units, which are subject to a higher 30-35% import tax. According to the Indian authorities, the company imported almost all its vehicles in unassembled state, but only paid a 5-15% tariff. The notification, dated September 30, is one of the largest tax requests of its kind. Volkswagen has received a show cause notice from the Maharashtra Commissioner of Customs, which requires the company to explain why the alleged tax fraud should not result in fines and interest under Indian law. If found guilty, the company may be fined up to 100% of the avoided sum, potentially amounting to $2.8 billion. This case could complicate Volkswagen’s situation in India, where the company has struggled to increase sales and its Audi brand trails behind luxury competitors such as Mercedes and BMW.
Volkswagen India slapped with massive Rs 11,000 crore notice for alleged import tax evasion.
