HUL faces ₹962 crore tax bill over GlaxoSmithKline deal

27 Aug 2024 , 10:45 AM

Hindustan Unilever got a tax claim of ₹962.75 crore from the Income Tax Department, including ₹329.33 crore in interest, the FMCG company said on Monday.

The notice is a result of the failure to deduct Tax Deducted at Source on a Rs 3,045 crore remittance made for the acquisition of India Health Food Drink intellectual property rights (IPR) from the GlaxoSmithKline group.

Notably, the notification concerns the acquisition of the Horlicks brand for India from GSK for Rs 3,045 crore. This transaction also brought other GSKCH products into HUL’s portfolio, including Boost, Maltova, and Viva.

Despite the high demand, the business has stated that it does not anticipate any substantial financial ramifications at this time.

“The Company has strong case on merits on tax not withheld, basis 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,” according to HUL.

In response to the demand, the FMCG major intends to appeal the order and take all required legal procedures under Indian law.

HUL has also said that it has an indemnification right, which permits it to recover tax demands raised by the Income Tax Department from relevant parties.

The corporation is expected to take additional steps to enforce this right.

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