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‘Misunderstandings…’: Xiaomi responds to ED’s Rs 5,551 crore seizure | Tech News

Hours after the Enforcement Directorate (ED) seized Rs 5,551.27 crore from Xiaomi Technology India Private Limited lying in the bank accounts under the provisions of Foreign Exchange Management relation to the illegal remittances made by the company, Xiaomi said that as a brand it is committed to India and its operations strictly comply with local laws and regulations.

Xiaomi said in a statement that it is committed to working closely with government authorities to clarify any misunderstandings.

“We have carefully studied the order of the government authorities. We believe that our royalty payments and statements to the bank are all legitimate and truthful. These royalty payments made by Xiaomi India were for licensed technologies and IP addresses used in our Indian version products. It is a legitimate business deal for Xiaomi India to make such royalty payments. However, we are committed to working closely with government authorities to clarify any misunderstandings,” the company said in a statement. a statement.

On March 3, the income tax department said it had carried out raids on Chinese companies, which sell telecommunications products, and learned that the companies were involved in tax evasion through false receipts.

The IT department had detected a revenue cut of Rs 400 crore at that time. The raids were carried out in the second week of February across India, including the National Capital Region (NCR).

The searches had revealed that the Chinese companies had made inflated payments against receiving technical services from their related parties outside India. The assessed company could not substantiate the genuineness of obtaining these alleged technical services in lieu of which payment was made, nor the basis for determining the consideration for them.

The research action had further revealed that the companies had manipulated their books of accounts to reduce their taxable income in India by creating various expense allowances, such as obsolescence allowances, warranty allowances, bad debts and advances, etc. ., which have little or no financial justification.

During the investigation, the groups had not provided any substantial and proper substantiation for these allegations.