Countries like India are crucial for Nokia's attempt to hold on to global market share. Earlier on Tuesday, it announced an expansion of its Asha line of low-end smartphones and India is widely seen as a key market for such cheaper models.
Nokia said the actions of the tax authorities were "unacceptable and inconsistent with Indian standards of fair play and governance."
The company objected to officials entering its factory in Chennai, southern India, which is one of its biggest facilities. Nokia said it has invested over $330 million in Chennai since setting up the factory in 2006.
A senior Indian tax official said in January that the investigation related to allegations that Nokia may have evaded around 30 billion rupees ($558 million) in taxes.
Nokia said on Tuesday it was in full compliance with local laws as well as a bilateral tax treaty between India and Finland related to withholding tax.