C Shivakumar
Chennai:
Income Tax department has summoned Nokia India officials for an enquiry into the tax irregularities worth Rs 3,000 crore on January 16 following an I-T survey conducted at the factory and corporate premises in Chennai and Gurgaon in Haryana respectively, according to Income Tax sources.
Income Tax officials told Express on Wednesday that prima facie there appears to be some defaults with respect to tax deducted at source (TDS) deductions on royalty payments made to its parent company based at Finland.
The survey operation, which was carried out under the instructions of Income Tax additional director general, Investigation, Murali Mohan along with a team of 20 officials lead by deputy director income tax (investigation) S Senthil Kumaran found out that Nokia India has been making remittances to its Finnish parent company Nokia International as payments for software supplies since 2005.
“The above payments for software would attract TDS as per the provisions of the Income Tax Act 1961. But it is learn that the assessee company has not made any TDS on the software payments for nearly seven years,” said Income Tax spokesperson K Baskaran.
During the survey carried out under Section 133 A of the Income Tax Act, it was also observed that the company has changed its accounting model and also it is in the process of re-organising the existing business model to bypass certain direct and indirect tax liabilities, Baskaran said.
Interestingly, clarifications have been sought from the executives of the company. The will be appearing for an enquiry on January 16. Similarly, the officials from the corporate office are expected to appear before the Income Tax office here after two to three days following the enquiry being conducted on Nokia Chennai officials on January 16.
Surprisingly, the transaction to the Finnish company are made in dollars. As per the current exchange rate (one dollar = Rs 55) the TDS default works out to Rs 3,000 crore. But it is believed that Income Tax department may take into account the exchange rate prevailing during that six to seven year period when dollar was fluctuating. This could work out to be anywhere around Rs 2,000 crore. Along with this the Income Tax department is also likely to levy an interest of 12 per cent thus taking the figure to more than Rs 4,000 crore, sources added
Income Tax department has summoned Nokia India officials for an enquiry into the tax irregularities worth Rs 3,000 crore on January 16 following an I-T survey conducted at the factory and corporate premises in Chennai and Gurgaon in Haryana respectively, according to Income Tax sources.
Income Tax officials told Express on Wednesday that prima facie there appears to be some defaults with respect to tax deducted at source (TDS) deductions on royalty payments made to its parent company based at Finland.
The survey operation, which was carried out under the instructions of Income Tax additional director general, Investigation, Murali Mohan along with a team of 20 officials lead by deputy director income tax (investigation) S Senthil Kumaran found out that Nokia India has been making remittances to its Finnish parent company Nokia International as payments for software supplies since 2005.
“The above payments for software would attract TDS as per the provisions of the Income Tax Act 1961. But it is learn that the assessee company has not made any TDS on the software payments for nearly seven years,” said Income Tax spokesperson K Baskaran.
During the survey carried out under Section 133 A of the Income Tax Act, it was also observed that the company has changed its accounting model and also it is in the process of re-organising the existing business model to bypass certain direct and indirect tax liabilities, Baskaran said.
Interestingly, clarifications have been sought from the executives of the company. The will be appearing for an enquiry on January 16. Similarly, the officials from the corporate office are expected to appear before the Income Tax office here after two to three days following the enquiry being conducted on Nokia Chennai officials on January 16.
Surprisingly, the transaction to the Finnish company are made in dollars. As per the current exchange rate (one dollar = Rs 55) the TDS default works out to Rs 3,000 crore. But it is believed that Income Tax department may take into account the exchange rate prevailing during that six to seven year period when dollar was fluctuating. This could work out to be anywhere around Rs 2,000 crore. Along with this the Income Tax department is also likely to levy an interest of 12 per cent thus taking the figure to more than Rs 4,000 crore, sources added
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