India warns Volkswagen's $1.4B tax dispute may have catastrophic consequences

The Indian government has firmly opposed Volkswagen's request to annul a $1.4 billion tax bill, warning it could create a dangerous precedent for companies to obstruct tax inquiries. This case, currently in the Bombay High Court, centers on allegations that Volkswagen misclassified car imports to evade higher tariffs, with the automaker arguing that delays in tax authority actions have hampered its defense. The tax authority has countered that Volkswagen is the cause of these delays by withholding essential information regarding its imports. If the court rules against Volkswagen, the automaker could face a total tax bill of $2.8 billion, including penalties and interest. As India seeks to attract foreign investment, lengthy tax disputes continue to raise concerns about the business environment in the country. The next court hearing is scheduled for Monday.