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The income-tax department has slapped a Rs 2,000-crore tax notice on Finnish mobile maker Nokia for an alleged evasion of tax on royalty paid by its Indian arm for download of software to manufacture devices. Nokia, meanwhile, has got an interim stay from the Delhi High court.
The department had on March 21 asked the firm to pay Rs 2,000 crore in a week’s time, the finance ministry officials said on Thursday. The next day, Nokia filed a writ before the court and obtained an interim stay. The court also asked the I-T department to file counter-affidavit, a Nokia spokesperson said in a statement.
The department would soon file its reply in the court, mentioning the provisions that “enable and authorise” it to issue such a time-bound notice, the officials said.
The issue relates to the royalty Nokia India had paid to its parent in Finland for downloading software to manufacture mobile devices at its plant in Sriperumbudur, Tamil Nadu. The royalty, according to the I-T department, attracts 10 per cent tax deducted at source — Rs 2,000 crore in this case.
The department had analysed the company’s business statements since 2006, the officials added.
The Nokia spokesperson reiterated the company’s position that it was in full compliance with the local laws, as well as the bilaterally-negotiated tax treaty between India and Finland. The statement said the company would defend itself vigorously.
It added, since establishing its factory near Chennai in 2006, indeed since starting India operations in the mid-1990s, Nokia had been scrutinised by the authorities regularly, and its policies had been validated by the Indian and Finnish tax authorities in the course of tax proceedings.
“Nokia arrived in India 18 years ago and has grown to become a market leader, contributing to the rapid growth of the Indian economy. It has invested over $330 million in Chennai since setting up the factory,” the statement added.
It said Nokia remained willing to cooperate with the Indian tax authorities, in accordance with all applicable laws.
