The Indian government has mandated Samsung and its executives in the country to pay $601 million (approximately Rs. 5,149 crore) in back taxes and penalties. This decision comes after allegations of tariff evasion during the importation of essential telecommunications equipment, marking one of the largest claims of this nature in recent years.
This financial demand equates to a significant portion of Samsung’s net profit in India, which stood at $955 million (around Rs. 8,183 crore) last year. The company has the option to contest this ruling in a tax tribunal or the judiciary.
Samsung, which also imports telecommunications gear through its network division, was warned in 2023 for allegedly misclassifying imports to sidestep tariffs of 10 percent or 20 percent on a crucial transmission component for mobile towers.
The company sold these components to Reliance Jio, a telecommunications giant owned by billionaire Mukesh Ambani.
Samsung requested that India’s tax authority reconsider the scrutiny, asserting that the component in question was exempt from tariffs and that officials had been aware of its classification practices for an extended period.
However, customs authorities disagreed, as noted in a confidential ruling from January 8 that was reviewed by Reuters.
According to Sonal Bajaj, a customs commissioner, Samsung “violated” Indian law and “knowingly and intentionally presented false documents before the customs authority for clearance.”
The investigation revealed that Samsung engaged in practices that breached business ethics and industry standards to maximize profits by defrauding the government, Bajaj stated.
The total amount mandated for Samsung includes 44.6 billion rupees ($520 million) in unpaid taxes along with a 100 percent penalty.
Additionally, seven executives from India are facing fines of $81 million (around Rs. 694 crore). Among those implicated are executives such as Sung Beam Hong, vice president of the network division, Chief Financial Officer Dong Won Chu, general manager for finance Sheetal Jain, and Nikhil Aggarwal, general manager for indirect taxes, according to the government order.
In response, Samsung asserted that the situation pertains to the classification of goods under customs regulations, maintaining its compliance with Indian laws. The company indicated that it is evaluating legal strategies to safeguard its interests.
Queries sent to India’s customs authority and the Ministry of Finance went unanswered. Reliance Jio also did not provide a response.
This incident occurs at a time when India is tightening regulations on foreign companies and their imports.
A separate legal conflict exists between Volkswagen and New Delhi, where the automaker is contesting a record demand for $1.4 billion (approximately Rs. 11,995 crore) in import back taxes based on misclassification of car parts. Volkswagen has denied any wrongdoing, describing the matter as critical to its operations in India, which has reignited concerns among foreign investors about tax disputes.
Remote Radio Head
The investigation into Samsung originated in 2021, when tax inspectors conducted searches at its offices in Mumbai and Gurugram, seizing documents, emails, and electronic devices. Senior executives were subsequently interrogated.
The case against Samsung focuses on the importation of the “Remote Radio Head,” a radio-frequency circuit in a compact outdoor module, which tax authorities characterized as a vital component of 4G telecommunications systems.
From 2018 to 2021, it was uncovered that Samsung had no tax payments on imports valued at $784 million (approximately Rs. 6,717 crore) for this component from South Korea and Vietnam.
The government indicated that the component, which is integral to telecommunications towers for signal transmission, is subject to tariffs, while Samsung disputes this classification.
Samsung robustly defended its categorization of the component, supported by expert opinions that claimed it did not function as a transceiver and could be imported without duties, according to the tax order.
As evidence against Samsung, tax officials presented letters from the company dated 2020, which categorized the component as a transceiver, defined as a device that transmits signals.
“Samsung was fully aware of the correct classification of the goods in question,” the tax commissioner stated.
© Thomson Reuters 2025
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
