Premium smartphone brand OnePlus is facing fresh regulatory and financial headwinds in India, with tax authorities raising a ₹93 crore goods and services tax (GST) demand linked to its much-publicised lifetime display warranty programme. The development comes at a time when the company has also reported a sharp decline in both revenue and profitability in FY25, raising questions around governance, compliance, and strategic execution.
Credits: Moneycontrol
The ‘Green Line’ Problem and OnePlus’ Warranty Gambit
The tax dispute centres on OnePlus’ “Green Line Worry Free Solution,” a lifetime warranty scheme offering free screen replacements to customers whose smartphones develop a vertical green line defect. The issue, widely reported since 2022–23, has affected several Android devices globally—particularly those using AMOLED displays—often after software updates.
Positioned as a customer-first initiative, the scheme was rolled out across OnePlus devices sold through authorised channels in India. The brand has repeatedly highlighted that it is the only smartphone maker to offer a lifetime display replacement for the green line issue, a move that helped protect brand loyalty amid rising consumer complaints across the Android ecosystem.
However, GST authorities have now initiated inquiries, searches, and inspections into the programme for FY24 and FY25, questioning its tax treatment.
₹93 Crore Tax Demand and OnePlus’ Legal Stand
According to regulatory filings submitted to the Registrar of Companies, GST officials have raised a tax demand of ₹93 crore in connection with the warranty programme. While the company has deposited ₹10 crore under protest, it is contesting the claim and has not made any financial provision for the demand.
OnePlus has stated that senior legal counsel has advised the company that it has a strong case and that the likelihood of liability is low. The filings do not clarify the precise grounds on which the tax demand has been raised, but such disputes typically revolve around whether free replacements constitute a taxable supply or post-sale service subject to GST.
A OnePlus India spokesperson said the company is engaging constructively with authorities and remains confident of a favourable resolution, while continuing to prioritise customer experience.
Financial Performance Takes a Hit
The tax issue comes amid a significant deterioration in OnePlus India’s financial performance. For FY25, the company reported a 13 percent year-on-year decline in revenue to ₹12,983 crore. More strikingly, net profit plunged to just ₹16 crore, down sharply from ₹230 crore in the previous year.
While the RoC filings did not attribute the decline to specific factors, the company said the performance reflects a strategic shift involving investments in systems, compliance, and infrastructure to support long-term growth. Industry watchers, however, note that increased regulatory scrutiny, higher operational costs, and intensifying competition in India’s premium smartphone market may have also weighed on margins.
Auditor Red Flags and Governance Concerns
Adding to the pressure, OnePlus’ statutory auditors made adverse remarks regarding the company’s internal financial controls. The auditors questioned whether adequate controls were operating effectively as of March 2025 and flagged the absence of sufficient audit trails.
Experts quoted in The Economic Times pointed to a deeper governance concern. Mohit Yadav, founder of business intelligence firm AltInfo, noted that auditors had effectively disclaimed an opinion on internal controls, while the company had not provided for a substantial GST demand. This disconnect, he said, is particularly concerning given a mid-year ERP migration that auditors said was still stabilising as of March 2025.
In response, OnePlus said it has already implemented corrective measures to address the auditors’ observations.
Credits: Talk to Iconic
More GST Notices Add to Regulatory Pressure
Beyond the ₹93 crore demand, OnePlus has also disclosed receiving several additional show-cause and scrutiny notices from GST authorities, involving an aggregate demand of nearly ₹280 crore. Against these claims, the company has deposited ₹1.85 crore under protest while submitting formal responses.
A Test of Trust and Compliance
For OnePlus, the coming months will be critical. While its lifetime warranty programme has bolstered consumer trust, the evolving tax dispute underscores the regulatory risks tied to innovative customer policies. As financial performance softens and governance scrutiny intensifies, how effectively OnePlus navigates compliance challenges may determine whether it can sustain its premium positioning in one of its most important global markets.
