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I-T Dept. Searches Huawei’s Bengaluru, Delhi Premises

The income-tax department has conducted searches at multiple premises of Chinese telecom company Huawei across Delhi, Gurgaon and Bengaluru on suspicion of tax evasion, people familiar with the matter said.

They added that the search operations, which have now been concluded, were a part of larger action against telecom companies under scanner for allegedly transferring profits to owner groups in foreign land while avoiding taxes in India.

“This is a part of the drive against firm evading taxes here and transferring their profits to their parents in the neighboring country. In almost all cases, the department has found that money has been routed through layering to the parent company under the guise of bogus expenses, royalty, share purchases and other expenses,” one of the people quoted earlier, said. “There is a huge loss to the exchequer”.

The operation comes months after a similar action against its Chinese counterpart ZTE.

In the case of Huawei too, the department suspects that it has shown remittance as royalty to and on behalf of its group companies located abroad, say people familiar with the matter. They added that a transaction worth a few hundred crores is under the scanner.

The department is probing instances of related party transactions that have not been reviewed by the company and is violative of norms. The people added that they are also looking into illegal share purchases, accounting discrepancies and currency exchange.

The authority has seized electronic and documentary evidence and is in the process of studying them before preparing its report on the purported tax evasion.

“We have been informed of the visit of the Income Tax team to our office and of their meeting with some personnel.

Huawei is confident our operations in India are firmly compliant to all laws and regulation. We approach related government departments for more information and fully cooperate,” a Huawei India spokesperson said in a statement.

The I-T action comes a few days after it was revealed that India had banned 54 more Chinese apps, taking the number of companies that have faced action to over 300 now.

Notably, Huawei recently bagged a telecom infrastructure expansion contract worth Rs.150 crore from India’s second largest telecom operator, Bharti Airtel.

The deal given to Huawei was part of an ongoing Airtel process to upgrade and expand its National Long Distance network currently run by the Chinese vendor. Airtel had last year awarded a similar contract to Huawei worth Rs.300 crore.

The Chinese company is facing huge uncertainty over its continued involvement in the Indian telecom market. S-ET

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