ED seizes Rs. 5,551 crores of Xiaomi India: Details here

On Saturday, assets worth Rs. Xiaomi Technology India Private Limited seized assets worth Rs. 5,551.27 crores. According to the agency, Xiaomi Technology India Pvt Ltd – a wholly owned subsidiary of the China-based Xiaomi Group – was discovered in violation of the Foreign Exchange Management Act. This law sets out rules for foreign money transfer in India.

ED has seized Rs.5551.27 crore of M/s Xiaomi Technology India Private Limited, which was lying in bank accounts in violation of Foreign Exchange Management Act 1999. This is in relation to illegal outward remittances.

According to IANS, Xiaomi stated in a statement it was committed to working with the government to clear any misinterpretations.

We have carefully reviewed the orders from the government officials. Our statements and royalty payments to the bank were true and legitimate, according to us. Xiaomi India paid royalty for in-licensed IPs and technologies used in the Indian versions of its products. This is an acceptable commercial agreement for Xiaomi India to pay such royalties. The company stated that it is committed to working with the government to clear any misinterpretations.

The Income Tax Department stated that on March 3 it had conducted raids of Chinese companies that deal in telecom products and discovered that they were engaged in tax evasion via fake receipts.

At that point, the I-T Department detected a suppression in income worth Rs 400 crore. These raids took place in India’s second week of february, which included the National Capital Region (NCR).

Searches revealed that Chinese companies had paid exorbitant amounts for technical services received from related parties in India. As well as the basis for determining the consideration, the assessee could not prove that the alleged technical services were genuine.

Further investigation revealed that these firms had created various expenses such as obsolescence provisions, warranty provisions, and advance provisions, in order to lower India’s taxable income. This is without any financial justification.

The investigation revealed that the groups failed to offer any solid and proper justifications for their claims.

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Conclusion

On Saturday, assets worth Rs. 5,551.27 crore of M/s Xiaomi Technology India Private Limited were seized by the Enforcement Directorate (ED). This action was in relation to illegal outward remittances in India. Illustration of such a case can be seen through the I-T Department