- India has ordered Samsung to pay $601 million in back taxes and penalties for allegedly misclassifying telecom imports to evade tariffs.
- The company, which supplied these components to Reliance Jio, may challenge the demand in court or a tax tribunal.
India has ordered Samsung and its executives to pay $601 million in back taxes and penalties for allegedly evading tariffs on key telecom equipment, according to a government order. The demand is among the largest of its kind in recent years.
The case centers on Samsung’s import and sale of telecom components, including a critical transmission part used in mobile towers. Authorities allege the company misclassified these imports to avoid tariffs of 10% or 20%. Samsung had received a warning in 2023 regarding the issue.
The tax demand amounts to a significant portion of Samsung's net profit in India, which stood at $955 million last year. The company has the option to challenge the ruling in a tax tribunal or court.
Samsung imports telecom equipment through its network division and has supplied these components to Reliance Jio, the telecom company owned by billionaire Mukesh Ambani.
Samsung has indicated its intention to challenge this ruling in a tax tribunal or court, asserting that the components should not attract tariffs and that customs officials were aware of their classification practices for years. However, customs authorities disagreed, as per a confidential January 8 order which is not public but was somehow reviewed by Reuters.
Furthermore, according to Indian officials, the company imported telecom equipment worth approximately $784 million from Korea and Vietnam between 2018 and 2021 without paying the required duties.
A government official familiar with the case stated that the authorities are intensifying scrutiny of import classifications to prevent tariff evasion.
Edited by Harshajit Sarmah
