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Nokia India lodges protest about Income Tax

Chennai, Feb 12 () : Nokia India has lodged a strong protest with the Income Tax higher-ups in the city and in New Delhi denying violation of tax agreement between two countries and harassment of its employees.

Nokia manufacturing unit located in the suburbs of Chennai was slapped with a tax notice of evasion worth Rs 2500 crore. The mobile maker has stated that it has not received any such notice and it was through media reports quoting anonymous IT officials.

The company takes cover under the India-Finland tax treaty. It claims that under the treaty it was not bound to pay the 10% tax on payments it made to the parent company for using the software it sent for making mobiles.

Nokia set up shop in Chennai in 2006 and has invested Rs 330 million and has 9000 employees. The mobile manufacturer is facing problems globally from rivals like Samsung and cheap Chinese models. However, in India, it has a dominant presence.

IT officials have said that Nokia India paid Rs 25,000 crore for downloading a software from the parent company website for making mobiles. As per IT rules, any payment to a NRI has to be given after deducting 10% at source.

Yet another area is the transfer pricing of shares. This is a major cause for most of the foreign owned companies and the recent being Shell served with a notice. Nokia is said to have transferred shares to its companies abroad by underpricing. As per rule the shares can be transferred to its subsidiaries abroad at the rate that it is traded in India. To solve this problem an advance pricing committee was formed so that companies can arrive at rates in consultation with IT.

Nokia has levelled serious charges of IT men entering the premises without any authorizations and despite cooperating with inquiries its employees were summoned and subjected to long hours of questioning.