The Income-Tax (I-T) Department on Wednesday confirmed that Nokia India, the Indian unit of Finnish cellphone maker Nokia Oyj, had defaulted tax worth about Rs 2,500-3,000 crore. The department, which concluded preliminary investigation in this regard on Wednesday, said it would question company officials on January 16.
The company changed its accounting model and was in the process of reorganising the existing business to bypass certain direct and indirect tax liabilities, it added.
Any payment made against the supply of software by the parent company was royalty and it attracted a 10 per cent tax deduction. According to a Clarification Amendment of the Finance Act, 2012, any payment made by a company to a non-resident company has to be subject to a 10 per cent tax. “Nokia India has been making remittances to its Finnish parent as payments for software supplies since 2005. The above payments for software would attract TDS (tax deducted at source). But the assesse company had not made any TDS on the above software payments,” according to I-T dept statement.