- Sunday, December 22, 2024
The notice relates to non-deduction of tax deduction at source while acquiring intellectual property rights of certain brands from GlaxoSmithKline Consumer Healthcare
By: Shajil Kumar
LEADING FMCG player Hindustan Unilever Limited (HUL) said that it has received a demand notice of ₹9.62 billion (£86.64m) crore from the Income Tax Department and will go in for an appeal against the order.
The notice relates to non-deduction of tax deduction at source (TDS) on payment of ₹30.45 billion (£274m) to GlaxoSmithKline Consumer Healthcare (GSKCH) for the acquisition of Intellectual Property Rights of the Health Foods Drinks (HFD) business consisting of brands as Horlicks, Boost, Maltova, and Viva, according to a recent exchange filing.
A demand of “₹9.62 billion (including interest of ₹3.29bn) has been raised on the company on account of non-deduction of TDS as per provisions of Income Tax Act, 1961 while making remittance of ₹30.45 billion (£274m) for payment towards the acquisition of India HFD IPR from GlaxoSmithKline ‘GSK’ Group entities,” it said.
According to HUL, the said demand order is “appealable” and it will be taking “necessary actions” in accordance with the law prevailing in India.
HUL said it believes it “has a strong case on merits on tax not withheld” on the basis of available judicial precedents, which have held that the situs of an intangible asset is linked to the situs of the owner of the intangible asset and hence, income arising on sale of such intangible assets are not subject to tax in India.
The demand notice was raised by the Deputy Commissioner of Income Tax, Int Tax Circle 2, Mumbai and received by the company on August 23, 2024.
“There should not be any significant financial implications at this stage,” HUL said.
The FMCG major had completed the merger of GSKCH in 2020 following a ₹317 billion (£2.85bn) mega deal. As per the deal, it had additionally paid 304.5 billion (£2.74bn) to acquire GSKCH’s brands such as Horlicks, Boost, and Maltova.
In January this year, HUL had received demands for GST (Goods and Services Tax) and penalties totalling ₹4.47 billion (£40.23m) from the authorities.
In FY24, HUL’s revenue was at ₹604.69 billion (£5.44bn). (PTI)
