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I-T Raids on Xiaomi, Oppo Premises Chinese Cos Under Lens

The income tax department on Wednesday raided the premises of top Chinese smartphone brands Xiaomi and Oppo, which official said followed “Intelligence inputs” suggesting concealment of income and evasion of taxes by the companies.

A day earlier, anti-smuggling agency Directorate of Revenue Intelligence had searched the factories of Foxconn India’s unit Bharat FIH, and Dixon Technologies in South India, government officials said. Bharat FIH and Dixon are contract manufactures Xiaomi.

More than 20 premises in the National Capital Region, Mumbai, Rajkot and Karnataka linked to Oppo and Xiaomi were searched by the tax department, said people aware of the matter. Searches were also conducted at the offices of One Plus, the Chinese company that has merged into Oppo but operates as a separate brand.

Xiaomi and Oppo said they were fully cooperating with the authorities. Bharat FIH and Dixon didn’t respond until press time to emails seeking comment.

Bharat FIH on Wednesday announced a Rs5000 crore IPO in India,

The I-T raids started early in the morning on Wednesday and continued till the end of the day. The tax department has not made any officials announcement till late evening, but people in the Know said factories, god owns, offices and the residences of senior executives of the companies and some of their distributors were searched.

“The residential premises of the CFO of one of the assesse firms was searched by the team; other key managerial persons have also been covered during the searches,” a senior official told ET. The raids were based on “actionable intelligence inputs” on “several violations” by the Chinese firms, the official said. In certain cases, losses were booked despite the import bills showing a profit, he said. The raids on Xiaomi and Oppo come amid crackdown against Chinese companies in India.

Over the last three months, the I-T department has conducted search operations on telecom and companies involved in mining, chemicals, manufacturing of heavy machinery and their associate companies, which are controlled by Chinese entities.

Investigations unearthed unaccounted income and found that these companies were including in tax evasion, according to government statements. Also, several state police and agencies have taken action against app-based lenders owned by Chinese companies under certain laws, including the Prevention of Money Laundering Act.

These actions come amid continuing border tensions between India and China, which led New Delhi to tighten rules on incoming investments from countries that share a border with India.

Wednesday’s searches also covered the offices of some of the Chinese distribution partners of Oppo.

“One of Pope’s Chinese distribution partners was recently penalized in hundreds of crores by the ED in Hyderabad,” another person familiar with the matter said.

“As an invested partner in India, we highly respected and abide by the law of the land. We will continue to fully cooperate with authorities concerned as per procedure,” an Oppo India spokesperson said in a statement to ET.

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