Nokia probed for Rs 3,000 crore tax irregularities

C Shivakumar

Chennai:

Nokia India is being probed by Income Tax sleuths for alleged tax irregularities worth Rs 3,000 to Rs 30,000 crore, according Income Tax officials overseeing the investigations.

Income Tax sources told Express on Tuesday that the enquiry is being conducted in two places in Nokia’s office in Sipcot Estate in Sriperumbudur.

Nokia has confirmed the investigation being carried out by income tax department. A Nokia spokesperson said that on Tuesday morning tax officials visited Nokia’s manufacturing unit in Chennai.

“Nokia is fully cooperating to ensure they get the necessary information to help in their inquiry,” the spokesman said.

Income Tax officials said that a team of 20 officials from income tax department are carrying out the investigations from 8.45 am.

A top income tax official said that the enquiry pertains to default in TDS (tax deducted at source) on payments to other countries against software supplies. TDS is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted by a person or company at the time of making/crediting certain specific nature of payment to the other person or firm and deducted amount is remitted to the Government account.

He said that if any company or a resident company makes a payment to foreign company and defaults on TDS then the whole expenditure will be disallowed. Currently we are invoking Section 40 (a) (1) of the IT Act. Interestingly, initial investigations reveal Nokia has defaulted on TDS worth Rs 3,000. And with Income Tax department invoking Section 40 (a) (1), Nokia India has to pay 100 per cent penalty as such they owe the Union government Rs 30,000 crore.

He said the investigation in this issue is a ongoing process as it would include verification, survey, report and assessments. “And if the party approaches court, then Supreme Court has to decide on the matter which could take more than a year,” he said.