Hindustan Unilever receives Rs 962 crore tax notice over TDS dispute

Hindustan Unilever tax notice: Hindustan Unilever, the fast-moving consumer goods (FMCG) major has been served with a tax demand notice of Rs 962.75 crore, including Rs 329.33 crore interest from the income tax department, according to a stock exchange filing. 

The company informed investors that the notice is related to the non-deduction of TDS related to a Rs 3,054 crore payment for the acquisition of health food drink (HFD) intellectual property rights from GSK group entities. 

“The Company has a 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. As the Demand Order is appealable, the Company will be taking necessary actions in accordance with the law prevailing in India. Further, the Company has an indemnification right to recover the demand raised by the Income Tax department and will undertake necessary steps in furtherance of the same,” Hindustan Unilever wrote in the exchange filing. 

Hindustan Unilever completed the IP merger with GlaxoSmithKline Consumer Healthcare Limited (GSKCH) with the required approvals in 2020. 

For Rs 3,045 crore the company acquired Boost, Maltova and Viva broadening HUL’s portfolio. 

For the quarter ended June, the YoY profit of the company jumped 3 per cent to Rs 2,538 crore, marginally missing the street estimates of Rs 2,541 crore.