India has accused Kia of evading $155 million in taxes by misclassifying component imports.
The tax authorities issued a notice in April 2024, alleging that Kia’s Carnival model was imported in parts through different ports to reduce customs duties. The company denies any wrongdoing and has submitted documentation in response.
Indian regulations impose higher duties of 30% to 35% on completely knocked-down (CKD) vehicle imports in a single shipment, while separate shipments of components qualify for lower rates of 10% to 15%. Kia’s case involves the Carnival model, which was marketed as CKD and sold 9,887 units between 2020 and 2022.
The tax authorities allege that more than 90% of the car’s parts were imported in CKD form, making it liable for higher duties.
Kia has deposited $32 million under protest while the case proceeds. If the company loses, it could face a total payout of up to $310 million, including penalties and interest.
Kia India reported its highest-ever domestic sales of $4.45 billion in fiscal 2022-23, with a net profit of $243 million.
The case follows similar tax disputes involving foreign automakers in India. Volkswagen is contesting a $1.4 billion tax demand, while Tesla has raised concerns about high import duties on electric vehicles.
Indian tax authorities have stated that automakers must comply with CKD duty regulations.
