The service tax department has charged the Indian arm of Microsoft with evading taxes to the tune of Rs 128 crore (Rs 1.28 billion) during 2006-07 and has asked to pay Rs 256 crore (Rs 2.56 billion), including penalty.
The department found that Microsoft India's Gurgoan unit carried out marketing activities for its India operations and not for the Singapore unit as it had claimed in its reply to a show cause notice served by the department earlier.
"We have finalised the notices which would be served very soon. The tax evasion pertains to the period from June 19, 2006 to December 12, 2007," a senior service tax official said.
"The evasions and