Volkswagen Sues India to Quash Enormous $1.4 Billion Tax Demand

Volkswagen's Indian unit, Skoda Auto Volkswagen India, has sued Indian authorities to quash an "impossibly enormous" tax demand of $1.4 billion.

India claims the company misclassified imported car parts as individual components to evade higher duties.

Volkswagen argues the tax demand contradicts prior clarifications received from the government and disrupts its $1.5 billion investment in India.

The dispute, which could cost Volkswagen $2.8 billion with penalties, highlights the challenges foreign companies face with India's tax system.

The High Court in Mumbai is set to begin hearings on February 5, amid concerns over investor sentiment and the business climate.