A hefty fine of Rs 653 crores has been imposed on Xiaomi by the Ministry of Finance in India for allegedly evading tax in the country. This news comes after it was recently suggested that both Oppo and Xiaomi could face a fine of up to Rs 1,000 crores in India. This is what happened.

Xiaomi India would have evaded customs duties in India

Based on information, it turned out that Xiaomi India has: customs duties evaded due to undervaluation, according to the report. Following this, an investigation was conducted by the Directorate of Revenue Intelligence (DRI) against Xiaomi and its contractors.

Xiaomi India’s premises were also searched, leading to the discovery of “incriminating” documents suggesting that the Chinese company transferred royalties and license fees to Qualcomm USA and Beijing Xiaomi Mobile Software as part of a contractual obligation.

The royalties and license fees were not added to the transaction value of the goods imported by Xiaomi and its contractors. This reduced the paper costs of the import and was found to be a violation under Article 14 of the Customs Act 1962 and Customs Valuation (Determining the Value of Imported Goods) Rules 2007.

Following the investigation, according to the provisions of the Customs Act of 1962, three reminders on the cause of the matter were sent to M/s Xiaomi Technology India Private Limited for the collection and recovery of the fine imposed.

In an official statement, Xiaomi said: “At Xiaomi India, we attach the utmost importance to complying with all Indian laws. We are currently studying the report in detail. As a responsible company, we support the authorities with all necessary documentation.“

It was further revealed that Xiaomi phones sold in India are either imported by the company or some of their parts are imported and the phones are then assembled in India. Xiaomi mostly imports from contractors and is bound by an exclusive contract.