Samsung challenges $520M India tax demand, joins Volkswagen in rejecting penalties

Samsung is challenging a $520 million tax demand by Indian authorities. The tax ruling was issued in January 2025 for allegedly misclassifying imports of a key telecom component. 

The misclassification of imports reportedly helped the company evade tariffs. However, Samsung is arguing that officials were aware of the practice, as India’s Reliance imported the same component in a similar manner for years, according to available documents.

Samsung contests India’s tax demands in court

According to a Reuters report , Indian tax authorities in January demanded that Samsung pay $520 million for evading the 10-20% tariffs by misclassifying imports of key mobile tower equipment, known as the “Remote Radio Head,” a critical component used in 4G systems.

It sold this component to billionaire Mukesh Ambani’s telecom giant, Reliance Jio, from 2018 to 2021, a company that used a similar business model without any consequence, even though tariffs were not paid.

Samsung alleges that the Indian authorities were “fully aware” of Reliance’s “long-established practice” of importing the same equipment for three years until 2017.

Meanwhile, Samsung’s India unit claims that an Indian tax investigation revealed Reliance had been warned about the practice way back in 2017. However, the firm kept the caution to itself, and tax officials never talked to Samsung.

“Reliance Jio officials did not inform” Samsung about the tax warning of 2017, it said. Further details of Reliance’s 2017 warning from tax authorities are not public and were not disclosed in the Samsung filing.

Aside from the $520 million it has to pay, Samsung also faces an $81 million fine targeting seven of its employees, which makes the total tax demand $601 million. It is currently unknown if the affected employees are separately challenging the fines.

Samsung is challenging the demand on the grounds of unfairness since the authorities were aware of the business model. If the South Korean technology firm had to pay the penalty, it would gulp a substantial chunk of its net profit from last year, which was $955 million for its India unit.

While defending its tariff declarations, Samsung also argued in its filing that the tax authority hastily passed the order in January without providing “a fair opportunity” to present its case, despite the “huge stakes” involved.

Samsung is the second major foreign company to challenge an Indian tax demand

Samsung is the latest major foreign company operating in India to challenge a tax demand from its authorities.

Volkswagen has also sued Prime Minister Narendra Modi’s government in court for a record demand of $1.4 billion for misclassifying its component imports.

The case remains active, with Volkswagen arguing that the tax demand contradicts India’s import taxation rules and threatens its $1.5 billion investment in the country.

The tax notice was issued in September 2024, and according to authorities, Volkswagen misclassified imports of VW, Skoda, and Audi car parts as individual components instead of completely knocked down units, thereby evading $1.4 billion in duties.

With penalties, the company could be liable to pay as much as $2.8 billion, a sum that Volkswagen’s lawyer has implied would greatly affect its India operations, which reported a net profit of just $11 million between 2023 and 2024.

The Indian government has strongly opposed Volkswagen’s plea, arguing in a March 2025 filing that dismissing the demand would trigger “catastrophic consequences” as it sets a precedent and encourages other companies, like Samsung, to withhold information and delay investigations.

Court hearings began on February 5, 2025, and the Mumbai High Court is expected to decide on the matter soon.

No final ruling has been reported as of the time of this writing.

Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot