Nokia India offers to pay Rs. 3,000 crore to resolve tax row

Finnish mobile phone maker Nokia faces a tax bill of more than Rs. 21,000 crores ($3.4 billion) in India from liabilities arising out of unpaid charges and penalties since 2006, a report said Tuesday.

Indian tax authorities froze some of Nokia's assets in October including its bank accounts and buildings over a dispute which has forced Nokia to approach the Indian courts seeking relief.

Nokia has reportedly offered to pay about Rs. 3,000 crore ($490 million), but the income tax department "has informed the Delhi High Court that Nokia India and its parent Nokia Corp have a tax liability adding up to Rs. 21,153 crores", the Times of India reported.

The paper said the submission was made by the income tax department in its reply to Nokia's plea for the unfreezing of its assets in India.

Nokia's Indian unit was not immediately available for comment on the report.

The case is due to be heard in court on Tuesday.

Nokia, which has one of its biggest plants worldwide in the southern Indian city of Chennai, is among a string of multinationals which face tax problems in India, including Cadbury, Royal Dutch Shell and Vodafone.

The alleged tax evasion involves software royalty payments to Nokia's parent, on which 10 percent tax should have been deducted and paid to Indian authorities, the income tax department claims.

Nokia hopes that its Chennai manufacturing plant could be unfrozen ahead of its sale to Microsoft Corporation.

Software giant Microsoft agreed in September to acquire Nokia's devices and services business for $7.2 billion, with the Chennai factory part of the deal.

The plant employs about 8,000 people and includes productions lines, maintenance assembly and testing operations.