The Indian government has issued a significant tax demand to Samsung, ordering the company and its executives to pay $601 million in back taxes and penalties. This demand is one of the largest in recent years and represents a substantial portion of Samsung's net profit in India, which was $955 million last year.

The tax authority's investigation found that Samsung had misclassified imports of a critical transmission component used in mobile towers, evading tariffs of 10% or 20%. The company had imported and sold these items to Reliance Jio, a major telecom operator in India.

Samsung had attempted to persuade the tax authority to drop the scrutiny, arguing that the component did not attract tariffs and that officials had been aware of its classification practice for years. However, the tax authority has rejected these claims and issued the demand.

The demand can be challenged by Samsung in a tax tribunal or the courts. If upheld, it would be a significant blow to the company's operations in India, where it is a major player in the consumer electronics and smartphones market.

The case highlights the Indian government's efforts to crack down on tax evasion and ensure that companies comply with tax laws. It also underscores the importance of accurate classification of imports to avoid tariffs and penalties.