The FMCG Giant Hindustan Unilever limited has been given a demand notice of 963 crores of income tax. From the point of view of HUL, the above-mentioned demand order is appealable and it will be taken all necessary measures strictly observing the current prevailing in the country.
To be precise, the amount quoted in the demand notice served by the income tax from the IT department is 962.75 crores and the companies planning to appeal against the same.
The demand notice given by the income tax department is related to the non-reduction of TDS, on payment of around 3045 crores to a company named GlaxoSmithKline Consumer Healthcare (GSKCH).
What was the reason behind the demand notice served by the IT Department?
The amount was for the acquisition of intellectual property rights of a health food drinks business consisting of well-known brands like Horlicks, boost, etc. A demand notice of 962.75 crores has been served to HUL, which includes interest of around 329 crores. This is for the non-deduction of TDS as per the Income Tax Act of 1961, while making the payment for the acquisition of intellectual property rights from GSKCH.
From the perspective of HUL, the above-quoted demand notice is appealable and the company will be checking all measures to make sure that it appeals against the order considering the prevailing rules and regulations established in India.HUL added that it believes that it has a strong case on merits that are not withheld based on available judicial precedents which have already been held that the situs of an intangible sale is linked to the situs of the owner of an intangible asset and hence income arising on sale of such intangibles are not subject to tax in India.
The demand notice quoting the payment of tax was raised by the Deputy Commissioner of Income Tax, Int Tax Circle 2 Mumbai, and received by the company on August 23rd, 2024.
Hul also added That other should not be any significant financial implications related to this at this particular stage.The FMCG Giant completed the merger of GSKCH in the year 20220 following a 31700 crore mega deal. As per the deal, it had paid additionally around 3000 crores to acquire the brands under GSKCH such as Horlicks, Boost, and Maltova.
In January 2024, HUL received demands for GST and penalties totaling 447.5 crores from the authorities. In the financial year 2024, the company’s revenue stood at around Rs 60469 crore.
In conclusion, it is that the company has put forward its views to the public in a capturing manner, which establishes The authenticity and the rationale behind its decisions. Anyways the FMCG investors are keen on looking forward to what happens in the appeal by HUL against the served demand notice.
