Chinese automaker BYD, which launched its electric car models Atto3 and the e6 in the Indian market, is reportedly facing an investigation in India for alleged tax payment violation.
Tax authorities in India say the Chinese automaker paid too little tax on imported parts for cars it assembles and sells in the country, Reuters reported, citing unnamed sources.
India’s Directorate of Revenue Intelligence (DRI) has alleged that China’s largest electric vehicle (EV) maker, whose expansion plans have been hit by fractious relations between New Delhi and Beijing, underpaid tax to the tune of $7 million (₹730 million), the report said.
Although BYD has deposited this sum after the DRI’s preliminary findings, the investigation is ongoing and could lead to additional tax charges and penalties.
The DRI is yet to issue a final notice to BYD, which can challenge the findings.
Reuters said BYD in India and China did not reply to its requests seeking comment.
The wire agency said India’s finance ministry also did not reply to its email and WhatsApp message seeking comment.
BYD under scrutiny amid tax violations
The alleged tax violations come even as BYD is facing heightened scrutiny from New Delhi over a $1 billion proposal to build cars locally, amid tighter rules on foreign investment from bordering nations, including China.
Media reports earlier said BYD told its Indian joint venture partner it had considered dropping the investment plans.
Companies from China have come under the spotlight in India since 2020 when border clashes broke out between the neighbours.
India taxes imports of fully built electric cars at 70 percent or 100 percent based on the value of the vehicle, but levies 15 percent or 35 percent on imports of car parts that are then assembled locally into an EV.
Those lower rates, however, are only applicable when parts such as a battery pack or motor are imported, without being mounted on a vehicle chassis.
The Reuters report, citing unnamed sources, said BYD had not met these conditions, making it liable to pay either 70 percent or 100 percent depending on the value of the car.
BYD, which has already invested more than $200 million in India, markets the Atto 3 electric SUV and the e6 EV to corporate fleets and plans to launch its Seal electric sedan later this year.
It has sold about 1,960 cars in India since starting sales in 2022, government registration data shows.
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