Oppo, Xiaomi can be fined for violating the law-ITD

Two foreign-controlled Mobile phone makers Xiaomi and Oppo can be fined Rs 1,000 crore for not complying with the "regulatory mandate prescribed under the Income-Tax Act, 1961 for disclosure of transactions with associated enterprises", the Central Board of Direct Taxes (CBDT) said on Friday. The searches were carried out on December 21 in Delhi and 11 states - Karnataka, Tamil Nadu, Assam, West Bengal, Andhra Pradesh, Madhya Pradesh, Gujarat, Maharashtra, Bihar, and Rajasthan. The search action has revealed that two major companies have made remittance in the nature of royalty, to and on behalf of its group companies located abroad, which aggregates to more than Rs 5,500 crore," the tax department said in a statement.

The tax sleeths found evidence with regard to the inflation of expenses, payments on behalf of the associated enterprises that led to the reduction of taxable profits of the Indian mobile handset manufacturing company. Such an amount could be in excess of Rs.1,400 crore, the I-T department said. In August, Chinese government-controlled telecom vendor ZTE was searched. Searches were conducted at five premises of ZTE, including their corporate office, and the residence of the foreign director.