Samsung could lose tax benefits in India due to invoicing issues

Samsung, the biggest smartphone brand in India, could lose tax benefits for the financial year 2021. The Indian government’s PLI (Production-Linked Incentive) scheme allowed smartphone brands to get some tax benefits if the devices are made locally and if the brands invest capital in the country.

According to a report from The Economic Times, Samsung may have to forego tax benefits for the inaugural year of the Indian government’s PLI scheme due to “discrepancies in invoicing.” The South Korean firm said that it had rectified those issues and is in advanced talks with the Indian government to solve the issue. In August 2021, Samsung claimed a total of INR 9 billion (around $108 million) as an incentive for achieving INR 150 billion (around $1.81 billion) worth of additional sales in FY21 over the year earlier.

To claim these incentives, the company had to manufacture phones that have a factory cost of around INR 15,000 ($200). However, the Ministry of Electronics and Information Technology (MeitY) found some discrepancies in Samsung’s invoices, and the officials withheld the payment.

A government official familiar with the matter said that Samsung has rectified the issue, and the invoices are now correct. However, the official said, “What’s gone is gone for the first year,” hinting that the South Korean firm might not get the tax benefits it is eligible for. The company will start getting tax benefits for the financial year 2022. Other manufacturers, including Foxconn and Wistron, have already received their tax sops from the government.

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