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Govt raids MNCs in India, discovers income tax evasion

The Income Tax Department has detected that two South Korean chaebols -- LG Electronics and Samsung Electronics -- have allegedly evaded taxes to the tune of Rs 20 million in their respective Indian operations.

The premises of the Indian subsidiaries of both the Korean conglomerates were surveyed and the companies were found to have not been complying to tax deduction at source for its Korean employees in India, a senior IT department official said today in New Delhi.

While LG Electronics India Limited is stated to have evaded taxes to the tune of over Rs 10 million, Samsung Electronics India Limited has allegedly evaded close to Rs 10 million in tax payments.

The irregularities have been detected and notices issued to these companies. It has been alleged that Korean officials working with LGEIL were getting two salaries -- one paid in India and the other in Korea.

As per the Indian income tax law, foreigners working in India have to file a declaration of any income earned by them abroad with their Indian employer. The Indian employer is then responsible for deducting tax at source on the total income of the foreign employee.

The officials further stated that pursuant to the notices, both the companies have expressed willingness to pay the arrears.

The Income Tax Department has already mopped up a total of Rs 5 billion from about 60 multinationals, mostly Japanese, as a follow-up of its tax evasion detection drive.

The amount has already been declared by the multinationals and paid-up as arrears. Some of the major companies detected on this count include Suzuki Motor Corporation, Bank of Tokyo-Mitsubishi, Sumitomo Corporation and Hyatt Hotels.

The IT department had been conducting surveys at the offices of most of the MNCs as part of its effort to plug the non-compliance by these companies in tax deduction at source.

While Suzuki Motor Company officials and nominees in Maruti Udyog Limited have evaded taxes to the tune of about Rs 1 billion, Bank of Tokyo-Mitsubishi officials have been alleged to have evaded Rs 500 million as taxes.

The official stated that the IT departments of Delhi, Gurgaon and Faridabad are working jointly to crack down on major corporate houses who are evading taxes by not declaring the income of their foreign employees in Indian operations.

Regarding the investigations of Suzuki employees, the official said summons have already been issued to all senior directors, including Maruti Udyog Limited chairman Yoshio Saito on suspicion of tax evasion via under-declaration of their foreign income received in Japan.

All the surveys were conducted under Section 133-A of the IT Act.

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