Samsung is getting hit with a sizeable tax penalty in India after failing to pay the government over import tariffs. The Indian government has levied a massive fine for failing to pay evading these duties on both the company and the senior executives. So here are all the details.

Samsung India Tax Penalty

The news comes from a Reuters report, which states that Samsung and its officials in back taxes and penalties for evading tariffs. These duties that the South Korean tech giant is over telecom equipment that it imported. This is one of the largest tax penalties demanded by the Indian government in recent times. The total sum faced by Samsung India is $601 million in penalties. This includes 44.6 billion rupees in unpaid taxes or around $520 million along with a 100 percent penalty.

That is not all, the government has also fined executives of the brand, which includes seven India based senior officials. Samsung executives have been hit with a $81 million fine, including network division vice president Sung Beam Hong, CFO Dong Won Chu, finance general manager Sheetal Jain, and indirect taxes general manager Nikhil Aggarwal. The brand has also been accused of misclassification of “Remote Radio Heads”, which is a critical 4G telecom component, which allows Samsung to avoid 10 percent or 20 percent tariffs.

The imports consisted of $784 million worth of components from South Korea and Vietnam between the periods 2018 and 2021. Mukesh Ambani owned Reliance Jio purchased these from the popular tech brand. This was also responsible for a large portion of Samsung’s net profits in 2024 in India, which totalled to around $955 million.

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The Indian government is considering slashing the import duty on electric cars to as low as 40 percent, reports Reuters citing two government officials. The development comes just days after Tesla appealed this to the Indian government.

The report adds that for electric vehicles (EVs) with a valuation of less than $40,000, the tax rate can be slashed to 40 percent compared to 60 percent currently. For EVs valued at over $40,000, the rate could be slashed from 100 percent to 60 percent.

India’s finance and commerce ministries, as well as Niti Aayog, are discussing the proposal and all stakeholders will be consulted.

According to industry estimates, India is currently the fifth largest car market with an annual sale of about 3 million vehicles. However, the majority of cars sold in the country are priced under $20,000.

Last month, Tesla had pitched the Indian government to reduce the import duty on electric vehicles by arguing that lowering duties would make EVs more affordable and boost sales.  However, the appeal from Tesla received mixed reactions from industry leaders in India and pushed the ‘Make In India’ initiative, India’s drive to boost local manufacturing.

But one of the officials said that the government is in favor of cutting import duties to see companies like Tesla providing benefits to the domestic economy by manufacturing locally later on, or give a firm timeline on when it would be able to.

A government official told Reuters: “Reducing import duties is not a problem as not many EVs are imported in the country. But we need some economic gain out of that. We also have to balance the concerns of the domestic players.”

Since the duty cut is being considered only for EVs and not other categories of imported cars, it should not be a concern for domestic automakers as they mainly manufacture affordable gasoline-powered cars.

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While the arrival of Tesla in India has been highly anticipated, the wait for the popular electric vehicles from the company might be longer due to the high import duty in the region.

According to a TimesNowNews report, the high import duty is one of the primary reasons why the American automobile maker hasn’t entered the Indian market. While it is possible to simply import a car from the company’s Gigafactory in China, the duty would make the car’s price surge, making it less viable in the market. So, the only way to avoid this would mean manufacturing and assembling the cars locally under the Indian government’s EV scheme.

At the moment, the Tesla Model 3 is one of the most affordable models from the company and is offered for a price of around 39,990 USD in the US (roughly 3,000,000 INR or 30 Lakhs). However, the Model 3 in India could reach prices as high as 60 lakhs in the region due to the import duties. This could make the affordable model be too expensive for the local market. As per industry experts, these import duties on fully imported cars to India are a great concern to Elon Musk.

As of right now, India leview a 100 percent tax on the imported cars that are priced over 40,000 USD inclusive of insurance and shipping expenses. Meanwhile, cars priced less than the 40,000 USD mark only have a 60 percent import tax. According to a Counterpoint Research analyst, “Musk has also criticized the government policies for electric vehicles (EV), as they attract the same import tariffs as for petrol and diesel cars.”

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LG recently announced that it will continue to assemble its smartphones in India despite the recent import duty hike on components shipped from overseas. However, this is also causing the company to expect a rise in prices for its smartphones in the region.

According to Advait Vaidya, Mobile Communications Business Head at LG India, “We are totally committed to MAKE IN INDIA vision & will continue to manufacture in India. In the long term, this situation will also create possibilities of local production by vendors including display & other components.” In other words, the move from the Indian government is aimed to boost the local production of such components.

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For those unaware, from 1st October 2020, the central government has levied a 10 percent basic customs duty on imports of various components like display assembly, touch panel/cover glass assembly, and more. This arrives despite various requests to the government to delay the levy by a year since these components aren’t currently made in India at the moment, which may lead to prices going up in the smartphone market by at least 3 to 5 percent as per industry estimates.

Vaidya further added that “we are closely monitoring the situation, it may have an impact on prices,” when reached out to by ET. LG is assembling its smartphone through its Pune factory and only holds less than 1 percent of the total Indian market. The components that are facing the import duty hike also make up for 25 percent of the smartphone’s cost, and it may take at least two years to establish a dedicated display fab unit in India if the company does decide to invest 300 to 400 crores on a single unit.

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India has imposed a customs duty of 5 percent on the import of key components used in manufacturing LCD and LED TVs. The notification was issued by the Finance Ministry and the duty went into effect from 1st October.

Earlier, the Ministry of Electronics and IT had proposed to impose a duty of 5 percent on open cell panels and bring the pure cell to zero percent in a bid to encourage the process of polariser film and COF bonding for open-cell.

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ICEA, which is representing companies like LG, Xiaomi, and Micromax among others, has been opposing the move claiming concerns about the implementation as the anomaly in the differentiation of open-cell with bonding and open-cell without bonding — pure cell — still remains a challenge.

Last month, the body had written a letter to Revenue Secretary seeking an extension on zero duty on the open cell imports for three more years. It argued that the policy has given a huge fillip to domestic manufacturing of LED televisions and has also led to a reduction in imports from ASEAN countries.

It has also warned of the growth of the grey market on imposing 5 percent duty. It also claims that there will be a rise in imports of LED TVs, giving a major blow to the government’s ambitious Make In India initiative.

The Indian Smart TV market is poised to grow further as the Internet is penetrating at a faster pace and OTT consumption is growing in the market. Currently, Xiaomi is leading the Smart TV market in India, followed by LG and Samsung.

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