Indian tax officials have opened up a new front in their battle to increase revenue collected from companies, targeting manufacturing firms that slash prices below cost in order to sell slow-moving inventory.
Car makers in particular, mostly multinationals, are in the spotlight, several tax officials and industry executives said.
Authorities are investigating whether the local units of General Motors, Suzuki, Honda, Ford and Daimler’s Mercedes-Benz sold cars at a loss, thereby paying lower excise duty.
Excise duty is due on almost all goods manufactured in India and is levied on the assessed value — usually the price at which the item is sold.
General Motors and Ford said they were cooperating with the tax authorities. Mercedes-Benz and the Indian subsidiaries of Honda and Suzuki declined to comment.
While no tax demand has been made yet against any of the car companies, the probe is likely soon to be widened to sectors including makers of consumer goods and computers, tax officials said.
The crackdown follows a spate of high-profile tax enforcement actions against global companies in India including Royal Dutch Shell, Vodafone Group and Nokia Oyj that has dented corporate sentiments.