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Tax demands to Nokia may cross Rs 10,000 crore

December 06, 2013 20:09 IST

The Income Tax department may raise a total demand of over Rs 10,000 crore (Rs 100 billion) against Finnish mobile firm maker Nokia which is embroiled in an alleged tax evasion case ahead of its global takeover by software giant Microsoft.

The department has calculated and arrived at the figure and may raise two separate demands to the tune of Rs 4,560 crore (Rs 45.6 billion) and Rs 6,008 crore (Rs 60.08 billion) respectively on Nokia Corporation and Nokia India, official sources said.

The media has been reporting a tax demand of Rs 6,500 crore (Rs 65 billion) on Nokia and the company had made an offer of deposit of Rs 2,250 crore (Rs 22.5 billion) to the government in the Delhi high court earlier this week.

Asked for its comments, the company said "we have not been served with any official claim, so we cannot comment on this."

The company said "we want to stress that our main focus right now is to remove the freeze on our Indian assets, including Chennai, before the deadline of December 12. This is a separate matter from the broader tax dispute.

"In recent months we have seen and read about many claims from the tax authorities. We feel they are without merit and will defend ourselves vigorously in court."

The I-T department has referred to the newly calculated figures in documents before the Delhi high court.

The new calculation is based on the penalty component on non-payment of taxes due under "copyright" related businesses of the firm and is "over and above" the original calculated amount.

The new demand, according to the documents, pertains to seven Assessment Years between 2006-07 to 20012-13.

The department has refused Nokia's earlier offer of making an interim payment for vacation of a stay on its assets and properties in India for going ahead with its deal with Microsoft. It has reasoned that if such a proposal is allowed it will lead to a "loss of revenue" which cannot be realised and may lead to protracted litigation.

The Delhi high court is set to hear the case again on December 9 when it will assess Nokia's reply to its earlier order of stating details of its assets and liabilities as well as how much tax it has paid in India.

Earlier, the mobile handset-maker firm had sought lifting of a stay on transfer of its assets in India saying the court's injunction will jeopardise the sale of its Indian arm to Microsoft under the $7.2 billion global deal.

The department has mentioned in deposition before the high court that it got wary about the firms intentions after it detected unreported transfer of Rs 3,500 crore (Rs 35 billion) to its parent company as dividend of 18 years.

The case pertains to an alleged tax evasion pertaining to royalty payment made against supply of software by Nokia's parent company, which attracts a 10 per cent tax deduction under the Tax Deducted at Source (TDS) category.

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