India orders Samsung to pay Rs 51510208702 in tax evasion as 3 key executives quit, company responds

India has asked Samsung India along with its executive to pay $601 million for tax evasion and non-compliance of tariffs on import of significant telecoms equipment. Samsung is among the topmost and key players in the electronics and smartphones market in India.  

India gave a warning to the tech giant in 2023 for misclassifying its imports to escape payments of taxes. The company was required to pay 10-20% tax on import of substantial equipment for mobile towers. It then sold these equipment to Mukesh Ambani's telecom company, Reliance Jio.  

Samsung moved the tax authority in India to discontinue the investigation against it, saying the equipment didn’t require to pay any tariffs and that they were already aware of how Samsung used classification for years. However, the authorities didn’t agree to this in a January 8 order that was kept confidential. In the same order, commissioner of customs, Sonal Bajaj, said that Samsung “violated” the laws here and “knowingly and intentionally presented false documents before the customs authority for clearance.”  

He added that Samsung “transgressed all business ethics and industry practices or standards in order to achieve their sole motive of maximising their profit by defrauding the government exchequer.” 

In the order, the authorities ordered Samsung to pay 44.6 billion rupees ($520 million), which included unpaid taxes and a penalty of 100%. The order also mentioned that the company’s seven executives are also ordered to pay a fine of $81 million, these include the network division's vice president, Sung Beam Hong, Chief Financial Officer Dong Won Chu and Sheetal Jain, a general manager for finance, as well as Nikhil Aggarwal, Samsung's general manager over indirect taxes.  

"The issue involves the interpretation of classification of goods by customs. We are assessing legal options to ensure our rights are fully protected,” said Samsung in an official statement, making clear that it complied with the laws.  

Volkwagon also hit by govt orders 

Among other foreign companies, German multinational automotive manufacturing company, Volkwagen, also faces warning of a whopping $1.4 billion tax notice as it imported parts for 14 models, shipping them separately to evade tax payment. However, the Indian side was taken to the court in Mumbai by the automaker which alleged that “impossibly enormous” tax imposition will affect its foreign investment. In response, the government said that if it takes back its demand for higher taxes then it would have “catastrophic consequences” which would send a wrong message to companies that’ll allow them to keep the important information classified and delay in inquiries.  

Three executives quit 

In a market with rising competition, at a time when the Korean tech giant, Samsung, was seeing some positive markers, three key executives have quit the company. Binu George, of corporate affairs and strategy, Surabhi Pant who served on policy and public affairs, and Nikhil Kaura from the same department quit last week. They were part of a seven-member team that was led by Rajiv Aggarwal who joined the company in December.  

Another major incident hit Samsung Electronics as its co-CEO, Han Jong -hee died due to a heart attack on Tuesday. He was 63.  

Samsung is a massive technology giant in South Korea and one of the biggest tech companies in the world. It has a net worth of $277.40 billion with its revenue that has seen tremendous growth in the past 10 years which made it worth 23% of South Korea's GDP.