Volkswagen Faces $1.4 Billion Tax Evasion Allegation in India

Volkswagen is under scrutiny in India for allegedly evading $1.4 billion in taxes by misclassifying car component imports. The company's approach of importing nearly complete cars in parts attracted lower duties. This controversy adds to Volkswagen's global challenges amid rising competition and internal disputes.

Volkswagen, the German automaker, is facing allegations in India for evading $1.4 billion in taxes, according to an official document. The tax evasion charges stem from allegedly misclassifying car components to benefit from lower import duties.

The notice highlights Volkswagen's practice of importing nearly whole vehicles in parts and declaring them individually to avoid higher taxes. This practice affected Audi, VW, and Skoda models, including luxury vehicles like the Audi A4 and Q5.

Volkswagen's challenges are mounting as it deals with labor disputes in Germany and declining sales in China. The ongoing tax controversy in India could lead to penalties, potentially doubling the evaded amount, compounding Volkswagen's issues worldwide.

(With inputs from agencies.)