Volkswagen Under Fire: $1.4 Billion Indian Tax Evasion Allegations

India has accused Volkswagen of evading $1.4 billion in taxes by importing car parts under false pretenses. The automaker allegedly manipulated import declarations to avoid higher taxes. India demands payment and penalties, which could increase Volkswagen's financial obligations to $2.8 billion.

Indian authorities have leveled significant tax evasion allegations against German automaker Volkswagen, claiming the company owes $1.4 billion in unpaid duties. The controversy stems from Volkswagen's import practices, which the authorities argue were designed to minimize tax payments.

According to an official notice, Volkswagen imported nearly complete vehicles under the guise of individual parts, a strategy that allegedly sidestepped higher import duties. This tactic, employed by the company's Indian arm Skoda Auto Volkswagen India, possibly involved multiple shipments to evade detection.

Volkswagen has been given 30 days to respond. A government source indicated that penalties, if imposed, could double the company's fiscal liability to $2.8 billion. This development adds to the challenges faced by foreign brands amidst India's stringent tax landscape.

(With inputs from agencies.)