Although the business is completely in India, the various Chinese companies that export the crores of income paid by the common people of India to China without paying tax are the leeches that are draining the Indian economy. Two of the most notable cases are the Chinese smartphone manufacturers Vivo, Oppo and Xiaomi.
Last year, the ED found that nearly 50 percent of the total turnover from Vivo India was illegally smuggled into China through hundreds of fake accounts. About Rs 62,476 crore was smuggled. The central government has not received the tax due for this amount. As part of this, ED has now frozen 119 bank accounts of Vivo company. The case filed by the Delhi Police also suspects some national security issues regarding Vivo's distributor in Jammu and Kashmir. It is also said that identity documents of some Chinese citizens are being used forgery.
The tax evasion came to light when the financial transactions of four Chinese nationals who went to China from India were examined from 2018 to 2021. The money was smuggled through around 23 paper companies started by them in different parts of the country to avoid paying tax on the income in India. Nitin Garg, a Chartered Accountant in India, provided necessary assistance for this. Vivo's former director Bin Loo left India in April 2018. Two other Chinese nationals, Zhengzhen Ou and Zhang Jie, left India in 2021.
The Delhi High Court has allowed Vivo's bank account to continue with certain conditions. The approval is subject to the condition of providing a bank guarantee of Rs 950 crore and maintaining Rs 250 crore in the account at all times.
Similarly, the Directorate of Revenue Intelligence (DRI) has accused another Chinese smartphone company of evading customs duty worth Rs 4389 crore. Penalties are also imposed under the Customs Act, 1962. A number of incriminating documents were also recovered following raids on the homes and offices of top officials of Oppo. Oppo has given incorrect details about many of the equipment imported for use in mobile manufacturing. In this way, duty of about Rs.2981 crore has been evaded.
It was also found that Rs 5551 crore brought by another Chinese smartphone maker, Xiaomi India, had been brought in in violation of foreign exchange rules. This amount has been transferred to three foreign companies. In a December 2021 raid by the Income Tax Department on the establishments and offices of suppliers and other related officials of Vivo, Oppo and Xiaomi, it was found that these companies had evaded India's tax laws and earned illegal income of around Rs 6,500 crore.