Volkswagen, the renowned German auto manufacturer, is embroiled in a legal battle with Indian authorities over a colossal tax assessment amounting to $1.4 billion (1.35 billion euros). This tax levy is noted as the largest import duty ever imposed by India and has sparked significant controversy.
The crux of the dispute lies in Volkswagen’s import strategy. The company reportedly brought in various models of its VW, Skoda, and Audi brands in multiple, unassembled parts. This method, according to court documents reviewed by Reuters, was intended to capitalize on lower tax rates, ranging from 5 to 15 percent, as opposed to the standard 30 to 35 percent applicable to fully assembled vehicles.
Indian authorities, however, have raised concerns, accusing Volkswagen of importing “almost all the cars” in a disassembled form to exploit these tax advantages. The company, on the other hand, insists that its practices are in compliance with New Delhi’s existing tax regulations regarding auto parts imports.
Volkswagen argues that the hefty tax demand not only contravenes Indian tax laws but also jeopardizes its investment and expansion plans within the country. The company warns that such a disputed tax environment could potentially deter future investments in India, thereby affecting the broader economic climate.