IT department conducts searches at Truecaller's India offices; company responds

The Income Tax Department of India has initiated an investigation into Truecaller, a caller ID and spam-blocking application. Reportedly, the searches are being done to examine its adherence to transfer pricing regulations. Tax officials conducted searches at several locations associated with the company, including its offices in Gurugram.

The raids took place on Thursday, without prior notice to Truecaller. According to a report by India Today, sources claim that the searches aimed to collect evidence on possible violations related to the company's transfer pricing policies, which could impact the allocation of profits and taxes between India and other countries.

On the same day, Truecaller issued a statement acknowledging the unannounced visits by tax officials. The company assured full cooperation with the authorities and mentioned that it was awaiting official confirmation on the investigation's purpose. Truecaller emphasised its commitment to transparent business practices, given its status as a publicly-listed entity.

Truecaller stated that this action by Indian tax authorities does not suggest any unique or ongoing tax investigation beyond regular audits. The company asserted that its transfer pricing policies adhere to the internationally accepted arm’s length standard, ensuring appropriate tax payments in both India and Sweden. These policies are regularly reviewed to comply with the tax requirements of both nations.

India continues to be a significant market for Truecaller, with over 400 million active users. The company recently introduced a new feature in India called Truecaller Fraud Insurance, designed to offer additional protection against fraud to its premium subscribers. Developed in partnership with HDFC Ergo, this feature is part of Truecaller’s efforts to enhance user security amid increasing online scams. It is currently available exclusively to Premium subscribers, expanding the company's premium service offerings in India.

Transfer pricing regulations aim to ensure that transactions between related entities across borders are conducted at market value, preventing profit shifting to lower-tax jurisdictions. Indian authorities have heightened scrutiny on multinational corporations to ensure compliance, particularly in the tech and digital sectors.