India’s income tax regulatory body, the Central Board of Direct Taxes (CBDT) has announced that it raided five locations including offices and private residences connected to a foreign company, ZTE India, over suspected tax evasion and discrepancies. The places affected by the raid are the corporate office of the company, the residences of the foreign director, the chief financial officer (CFO), the company secretary, and the cash handler of the Chinese-owned company.
All the locations were in New Delhi and the search was aimed at establishing the tax liability status of ZTE and hundreds of its employees over the years. The search may have yielded a trove of evidence some degree of tax evasion and discrepancies. The accusation also includes the failure of ZTE to deduct tax at source for several years. The amount of money involved in tax evasion is not yet clear but is believed to be huge. An official statement by the CBDT however did not directly name ZTE, although the allusion to the fact that the company was engaged in trading of telecom equipment, installation, and servicing of the equipment, leaves no one in doubt who this company was.
The tax compliance agency CBDT says it had recovered a large amount of evidence that indicates an elaborate and well-oiled scheme to evade the payment of valid taxes by the company. The company was also accused of deliberately not deducting TDS on the basis of the scrutiny of its expenses books. The investigation could span back to 2014 and begin on August 16. Several top officials of the company were questioned in relation to the raid, although no arrests were made.
The investigation is possibly linked to ZTE India’s business dealings with state-owned telecom operator BSNL with some regularities observed. The searches could also be linked to financial irregularities and potential issues linked to the BSNL entered by ZTE. The regulator says it has already recovered incriminating evidence in the form of electronic data and paper documents.
Expatriate employees were also alleged to be trading illegally in medicines from India to China. ZTE has yet to respond to the accusations at this time.
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(source)
