India seeks approx. 1.54 billion rupees in back-taxes from LG Electronics
LG Electronics' Indian subsidiary has received a tax demand notice from Indian customs for approximately 1.54 billion rupees. The notice alleges under-reporting of royalty payments in the valuation of imported goods.
LG Electronics' Indian operations are facing a demand for approximately 1.54 billion Indian rupees (around €108 million) in back-taxes. The Indian customs department has issued a notice alleging that the company under-reported royalty payments when calculating the customs value of imported goods.
The notice was issued by the Office of the Commissioner of Customs (NS-V). LG Electronics India stated it is reviewing the matter and plans to submit its response within the stipulated deadline, asserting that the company has fully complied with customs regulations.
The dispute centers on Section 14 of India's Customs Act of 1962 and related valuation rules, which stipulate that royalty and license fees paid by the buyer as a condition of sale must be included in the transaction value of imported goods. The core issue is often whether royalty payments constitute a "condition of sale" and are directly linked to the imported goods.
LG Electronics India has indicated that the financial impact of this matter will be determined once a final adjudication is made. Currently, the notice represents a proposed demand, not a finalized liability.