Chinese automaker BYD is under investigation by India’s Directorate of Revenue Intelligence (DRI) over allegations of underpaying tax on imported parts for cars it assembles and sells in the country, Reuters reports.

What Happened: The DRI alleges that BYD, China’s largest electric vehicle (EV) maker, underpaid tax of ₹73 crore ($9 million). Although BYD has deposited this sum following the DRI’s preliminary findings, the investigation is ongoing and could lead to additional tax charges and penalties.

BYD’s scrutiny from New Delhi has increased over a $1 billion (₹8,250 crore) proposal to build cars locally, amid tighter rules on foreign investment from bordering nations, including China. BYD had considered dropping the investment plans due to this scrutiny.

India taxes imports of fully built electric cars at 70% or 100% based on the value of the vehicle, but levies 15% or 35% on imports of car parts that are then assembled locally into an EV. The DRI alleges that BYD did not meet these conditions, making it liable to pay either 70% or 100% depending on the value of the car.

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