Volkswagen sues India to quash $1.4 billion tax notice

The tax notice "deals a body blow" to the much-advertised "policy of ease of doing business in India for foreign investors," VW said.

Volkswagen has sued Indian authorities to quash a tax demand of $1.4 billion.

According to a media report, Skoda Auto Volkswagen India told the Bombay High Court that the tax demand is not only contradictory to the government’s import taxation rules for car parts, but it also puts at risk its investments of $1.5 billion in India.

The government had slapped a $1.4 billion tax notice on the German carmaker’s Indian subsidiary in September 2024, alleging that the company paid less import tax on components.

Volkswagen used to import almost the entire car in unassembled condition but “mis-declared and mis-classified” it as “individual parts”. The company is said to have paid $980 million in import taxes and other levies since 2012, whereas it should have paid $2.35 billion.

Neither Volkswagen nor the Indian finance ministry has issued any official statement regarding the latest development.

Source: Reuters