In Short:
Hindustan Unilever Limited (HUL) faces a tax demand of ₹962.75 crore from the income tax department, including ₹329.33 crore in interest. This stems from a payment for acquiring health drink intellectual property from GlaxoSmithKline. HUL believes it has strong legal grounds against this demand and will appeal, asserting that the income isn’t taxable in India. They also plan to seek reimbursement.
Hindustan Unilever Faces Tax Demand
In a recent development, **Hindustan Unilever Limited (HUL)**, a leading player in the fast-moving consumer goods (FMCG) sector, has been hit with a tax demand amounting to a staggering ₹962.75 crore. This amount includes ₹329.33 crore in interest, as informed by the income tax department.
Background of the Demand
According to a stock exchange filing by HUL, the tax notice is related to the non-deduction of TDS (Tax Deducted at Source) concerning a hefty payment of ₹3,054 crore. This payment was made for acquiring **health food drink (HFD) intellectual property rights** from entities within the **GlaxoSmithKline (GSK)** group.
No Major Financial Impact
Despite the tax demand, HUL has reassured its stakeholders that there will be no significant financial implications at this moment. The company stated, “We have a strong case based on existing legal precedents indicating that the location of an intangible asset is tied to its owner’s location. Hence, any income generated from the sale of such assets should not be taxed in India.”
Next Steps for HUL
The tax demand can be appealed, and HUL has expressed its intention to take the necessary legal actions in accordance with Indian law. They also highlighted that they have an indemnification right to recover the demand raised by the income tax authorities, which they plan to pursue vigorously.
As this story unfolds, all eyes will be on HUL’s next steps and how they navigate this challenging situation.
